The European Commission’s notice on Directive 98/44 and the European Patent Organization’s response: the unpredictable interaction of EU and EPC law

The European Commission’s notice on Directive 98/44 and the European Patent Organization’s... The author Rob J. Aerts, Dr, MA is European and Dutch Patent Attorney and Director of Intellectual Property at Tigenix SAU in Madrid. This article Since the Biotech Directive (Directive 98/44), the patentability of biotechnological inventions in Europe has been governed by two separate and unrelated legal systems, namely European Union law and European Patent Convention (EPC) law. Given their different legal status, the two systems are not always fully aligned. In the past, the Court of Justice of the European Union (CJEU) found certain stem cell-related subject matter patentable, despite the initial denial of patentability under the EPC system, which took some time to align itself with the CJEU. In recent developments, the EPC system has implemented an exclusion from patentability of certain plant-related subject matter, while the CJEU has not yet decided on the matter. The latter situation may be a more serious source of concern than the stem cell case, as it cannot be excluded that the CJEU could ultimately render decisions at least partially contrary to the recent implementation by the EPC system. Should this happen, patent applicants and patentees may lose European patent rights irrevocably, because the EPC system does not provide for any form of legal redress. Ever since the adoption of the Biotechnology Directive (Directive 98/44; Biotech Directive) by the European Union (Union),1 and the subsequent incorporation of its provisions in the Implementing Regulations of the EPC,2 the patentability of biotechnological inventions has been governed by a hybrid system and has consequently been subject to a certain degree of legal uncertainty exposing a lack of straightforward harmonization. The recent responses by the European Patent Office (EPO) and the Administrative Council of the European Patent Organization to the European Commission’s interpretation of certain articles of the Biotech Directive illustrate the unpredictable nature of the interaction between Union law and EPC law. This article analyses these developments, showing that a certain level of at least temporary legal uncertainty on what is patentable and what is not in the field of biotechnology appears inherent to the hybrid system of European patent law. While in the past legal uncertainty was caused by the fact that it took some time for the European Patent Office (EPO) to adapt to the new case law of the Court of Justice of the European Union (CJEU) allowing the patentability of parthenotes (a type of human embryonic stem cells3), recent developments bring about the opposite situation: the Administrative Council of the European Patent Organization has made a decision on exclusion from patentability of plants obtained by a breeding method, based on an opinion by the European Commission (Commission), but it is presently unknown whether the CJEU will actually follow the opinion of the Commission. The Commission’s opinion is not binding: only the CJEU is competent to interpret Union law, and the Commission has indicated that it may change its advice in the future following the CJEU’s intervention.4 This last situation may be more troublesome than the stem cell scenario, since in the case of plant-related inventions rights may be lost irrevocably, whereas future developments and decisions may hold these rights valid. The same provisions in Union law and European Patent Convention law The Biotech Directive was promulgated by the Council and the European Parliament to harmonize patent protection throughout the Member States of the Union and to maintain and encourage investment in the field of biotechnology.5 During the legislative process, there was a strong democratic influence exercised by the European Parliament, which rejected a first version of the Directive and agreed only with a second amended version.6 Furthermore, the legitimacy of the Directive under Union law has been thoroughly tested and approved by the CJEU in the action for annulment initiated by the Kingdom of the Netherlands.7 Subsequently, provisions of the Biotech Directive have been literally incorporated in the Implementing Regulations to the European Patent Convention (EPC) by the Administrative Council, representing both Union Contracting States and non-Union Contracting States.8 Also, rule 26(1) of the Implementing Regulations states that the Biotech Directive ‘shall be used as a supplementary means of interpretation’. However, the rules are subordinate to the Articles of the EPC (Article 164(2) EPC). The insertion of the provisions of the Biotech Directive in the rules of the EPC was performed by the Administrative Council with the best intentions, since the Council can only amend the Implementing Regulations, not the articles of the EPC themselves (this would require a much more drastic measure, namely a Diplomatic Conference of the Contracting States).9 Thus, the original articles of the Biotech Directive have a totally different status under Union law compared to the same provisions incorporated in the Implementing Regulations to the EPC under EPC law, where the articles of the EPC prevail. The incorporation of provisions of the Biotech Directive does not mean that Union law was somehow implemented in the EPC.10 It follows from Opinion 1/09 of the CJEU that the only guardians of the EU legal order are the courts and tribunals of the Member States in collaboration with the CJEU, to which questions on the interpretation of Union law are referred by the courts of the Member States.11 The EPO and the Boards of Appeal are part of a legal order that is separated from the Union legal order.12 Boards of Appeal are institutionally and judicially outside of the Union legal framework, and they cannot take the place of courts and tribunals of EU Member States.13 Consequently, it is impossible for the Boards to refer questions on the interpretation of Union law, such as the Biotechnology Directive, to the CJEU.14 EPO Boards of Appeal apply EPC law, and decisions by the CJEU are not legally binding on either the Boards of Appeal or the EPO.15 In contrast, the courts and tribunals of EU Member States can (or, given the circumstances, must) refer questions on the interpretation of provisions of the Biotechnology Directive to the CJEU, and the rulings of the CJEU are binding on those courts and tribunals.16 This governance of the patenting of biotechnological inventions in Europe by two separate and unrelated legal systems has resulted both in the tendency of each system to go in its own direction and in attempts to try and harmonize biotech patent law in Europe.17 The definition of what subject matter in the field of biotechnology is patentable and what is not has become rather unpredictable. Recent developments in the field of plant-related inventions illustrate this phenomenon. Decisions of the Enlarged Board of Appeal in the field of plant-related inventions From the onset of European patent law, the classic process of plant breeding by crossing and selection of plants has in principle been excluded from patentability, because intellectual property rights related to plant breeding are regulated by a separate body of law, namely plant variety protection (UPOV Convention).18 The relevant provisions here are Article 53(b) EPC and Article 4(1)(b) Biotech Directive, which hold that ‘essentially biological processes for the production of plants or animals’ shall not be patentable. Importantly, the Biotech Directive in Article 2(2) defines a process as ‘essentially biological if it consists entirely of natural phenomena such as crossing or selection’. This provision was transposed literally in rule 26(5) EPC. In its combined decisions G 2/07 and G 1/08 (‘Broccoli/Tomato I’) on the precise meaning of the term ‘essentially biological process’, the Enlarged Board of Appeal of the EPO made a thorough investigation of the interpretation of rule 26(5) EPC, and decided that this rule did ‘not give any useful guidance’ and in its final decision ignored the rule, and interpreted Article 53(b) EPC solely ‘on its own authority’: according to the EPC, a rule is subordinate to an article. The Enlarged Board of Appeal ruled that in principle an ‘essentially biological process’ entails sexually crossing the whole genomes of plants and subsequently selecting plants.19 The disregard of Article 2(2) of the Biotech Directive by the Enlarged Board of Appeal is the consequence of the lawmaking process of the Administrative Council, which can only amend rules. However, while the Enlarged Board of Appeal can ignore the provision in the Implementing Regulations taken from Article 2(2) Biotech Directive, the CJEU in a relevant referral would most likely give an interpretation of this provision. This indicates the tension between the two legal systems: we do not know how the CJEU would interpret the term ‘essentially biological process’ taking into account Article 2(2) Biotech Directive until the question is referred to that court, and the Boards of Appeal and the Enlarged Board of Appeal of the EPO cannot refer such a question to the CJEU, unlike courts of EU Member States. The CJEU might, for instance, come to a conclusion that differs from the one of the Enlarged Board of Appeal, and rule that essentially biological processes involving sophisticated technical steps are not excluded from patentability since Article 2(2) of the Biotech Directive only excludes processes consisting entirely of natural phenomena such as crossing or selection. In contrast, the Enlarged Board of Appeal has decided that a step of a technical nature assisting in a crossing and selection process does not mean that the exclusion from patentability can be circumvented.20 After decisions G 2/07 and G 1/08, the Enlarged Board of Appeal investigated, in decisions G 2/12 and G 2/13 (‘Broccoli/Tomato II’), whether plant products obtained by an essentially biological process are patentable or not. After extensive analysis, taking into account the preparatory work of the Biotech Directive and Article 4(2) of the Directive (which refers to the patentability of plant products), the Enlarged Board of Appeal concluded that in principle there was no reason to exclude plant products from patentability, even when obtained by an essentially biological process which itself is excluded from patentability. Such product-by-process claims should be allowable.21 However, the situation in EU Member States may differ: once again in these states the ultimate decision, on whether the prohibition of patentability of an essentially biological process should be extended to the plant product obtained by the process, depends solely on a referral of the appropriate question to, and a ruling by, the CJEU. The Commission's notice and the response by the European Patent Organization The European Parliament has always been critical of patent protection for plants, and, in its role as a democratic institution within the Union, the Parliament asked the Commission to advise on the interpretation of certain provisions of the Biotech Directive, and in particular on the patentability of plants obtained by an essentially biological process.22 In its advice, the Commission emphasized that only the CJEU can decide on the matter: the Union is based on the rule of law and there is a separation of powers between the institutions.23 The Commission took Article 4(2) Biotech Directive into consideration, and in particular the preparatory work of the Directive, and concluded, in contrast to the Enlarged Board of Appeal, that it was the intention of the lawmakers of the Biotech Directive to exclude from patentability plant products obtained by an essentially biological process.24 The Commission concluded that Article 4(2) is to be interpreted as an exception, deeming patentable a plant invention if the technical feasibility of the invention is not confined to a particular plant variety, an example being the case of a gene inserted into the genome of plants (ie the technical process of genetic engineering).25 After the Commission issued its notice, the EPO stayed all examination and opposition proceedings in which the invention is that a plant was obtained by an essentially biological process.26 Subsequently, the Administrative Council took the notice of the Commission into consideration and decided almost unanimously to follow the advice of the Commission on the interpretation of Union law. The Administrative Council implemented the Commission’s advice in the new rule 28(2) of the EPC27: ‘Under Article 53(b), European patents shall not be granted in respect of plants or animals exclusively obtained by means of an essentially biological process.’ The Administrative Council indicated that this implementation ‘safeguards uniformity in harmonized European patent law’, although the Commission had cautioned that Union law itself is not harmonized on this point and the notice stated that the Commission’s advice ‘does not prejudge any future position of the Commission on the matter’ since only the CJEU is competent to interpret Union law.28 After the disregard by the Enlarged Board of Appeal, in decisions G 2/07 and G 1/08, of rule 26(5) EPC and of the comparable provision in Union law defining ‘essentially biological processes’ as consisting entirely of natural phenomena such as crossing or selection, the recent decision of the Administrative Council additionally seems to increase uncertainty in the field of patenting of plant-related inventions: the Administrative Council has not only introduced into an intergovernmental treaty—the EPC—a non-binding advice by a Union institution about Union law, but it has also, within the EPC system, overruled the decisions G 2/12 and G 2/13 of the Enlarged Board of Appeal on the patentability of plant products. In principle, it cannot be excluded that the Boards of Appeal may be somewhat hesitant to apply the new rule 28(2), a situation that would introduce further uncertainty. The interaction of the two legal systems and consequences for the validity of rights The EPC provides a self-contained system, and the lawmaking process by the Administrative Council cannot be tested before an independent court like the legitimacy of lawmaking under Union law can be tested before the CJEU.29 It has been questioned elsewhere whether the Administrative Council was not ‘overstepping its competence’ by taking elements of Union law and plainly inserting them in the rules of the EPC.30 It remains unknown how the CJEU would ultimately decide on the interpretation of the term ‘essentially biological process’ being defined as a process that `consists entirely of natural phenomena', and whether the CJEU would endorse in full the advice given by the Commission on the exclusion of plant products obtained by an essentially biological process from patentability, if such questions were referred to the court. The CJEU could, for instance, interpret the term ‘essentially biological process’ in a manner different from that of the Enlarged Board of Appeal of the EPO, which in turn may influence the circumstances under which the products obtained by such a process are patentable or not. In case an essentially biological process other than the traditional breeding methods that Article 2(2) Biotech Directive seems to refer to—eg a crossing or selection process assisted by sophisticated technical steps—was deemed patentable, the products thus obtained may be deemed patentable as well.31 It is estimated that, since 1980, about 180 European patents that deal with traditional breeding methods have been granted by the EPO, and the validity of these patent claims has now become unclear.32 Likewise, the fate of European patent applications claiming plants obtained by an essentially biological process is uncertain: future developments and decisions under Union law may partly or entirely come to a different conclusion than the exclusion from patentability now implemented by the Administrative Council in the new rule. There are no legal means of redress and there is no independent judicial review for the loss of rights when a patent application or a patent is respectively refused or revoked under EPC law. It was noted before that this lack of legal remedy is a fundamental shortcoming of the European patent system.33 The EPO is not bound by Union law, and the Office has stated repeatedly that it is a separate legal order from the Union and that it is not a member of the Union. At most, it can find the decisions of the CJEU ‘persuasive’.34 The situation with respect to plant-related inventions represents the reverse of the situation that existed for some time with respect to the patentability of human embryonic stem cells. In respect to the latter, the EPO had to adapt to the case law of the CJEU in which patentability was broadened. In decision C-364/13, the CJEU ruled that human parthenotes (artificially activated unfertilized egg cells) that are incapable of developing into human beings are in principle patentable subject matter. It took a while for the Examining Division of the EPO to adjust its practice and to allow patents on parthenotes in line with the decision of the CJEU.35 Importantly, it should be noted that if the question on the patentability of parthenotes had not been referred to the CJEU by means of a pending national patent application,36 it is likely that the EPO would have maintained its refusal of European patent applications claiming parthenotes. Regarding plant-related inventions, the Administrative Council of the European Patent Organization has made a decision on patentability based on an opinion of the Commission which could be modified by the Commission in the future, and it is currently unknown whether the CJEU will actually follow all elements of this opinion. This situation would appear to be much more disquieting than the developments in the field of patenting of stem cells, since it cannot be entirely excluded that plant-related patent rights be lost without any possibility of recovery, even if that would encompass a violation of Union law.37 As a prerequisite for true harmonization of patent law in the field of biotechnology in Europe, the provisions literally transposed from the Biotech Directive should at least have been inserted in the articles of the EPC rather than in the rules. Furthermore, for true harmonization, a means of referral of appropriate questions by the EPC system to the CJEU on the interpretation of the Biotech Directive provisions should exist—a mechanism presently unimaginable, since the EPC legal system is not part of the Union law system. Further, upon the introduction of the Unitary Patent the situation will still not improve, since the EPC-governed granting of Unitary Patents still does not allow the possibility for the EPO to submit questions to the CJEU.38 Although the two legal systems closely monitor each other and undoubtedly attempt to harmonize biotech patent law in Europe,39 patent applicants and patentees have to live with the legal uncertainty resulting from the fact that biotech patent law in Europe is governed by two separated and unrelated legal systems. This legal uncertainty is in the best case temporary, but it might be more severe and may require considerable time before appropriate questions are referred to the CJEU and decided by the court. In the meanwhile, the existence of valid rights, or otherwise, remains uncertain. As was noted before, patent law within Europe is currently subjected to diverging rules made by different bodies, and as a consequence legal disharmony cannot be avoided.40 Footnotes 1 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L213/13–21. 2 Convention on the grant of European patents of 5 October 1973, revised by Acts of 17 December 1991 and 29 November 2000, text as adopted by decision of the Administrative Council of 28 June 2001. 3 Case C-364/13 International Stem Cell Corporation (ISCC) v Comptroller General of Patents [2014] EU:C:2014:2451; De Clercq & Partners, ‘A New Tool in the Analysis of the Patentability of Human Stem Cells: “To Have or Not to Have the Inherent Capacity to Develop Into a Human Being,”’ Newsletter (December 2015) 4–5. 4 European Patent Office, ‘EPO Clarifies Practice in the Area of Plant and Animal Patents’ (29 June 2017) <https://www.epo.org/news-issues/news/2017/20170629.html> accessed 30 June 2017; European Patent Office, Official Journal (31 July 2017) A62 <http://www.epo.org/law-practice/legal-texts/official-journal/2017/a62.html> accessed 28 August 2017; Official Journal of the European Union, ‘Commission Notice on certain articles of Directive 98/44/EC of the European Parliament and of the Council on the legal protection of biotechnological inventions’ [2016] 2016/C 411, 8 November 2016, 3–14. 5 See n 1, Preamble 1, 3. 6 I Schneider, ‘Governing the Patent System in Europe: the EPO’s Supranational Autonomy and Its Need for a Regulatory Perspective’ (2009) 36(8) Science and Public Policy 619–629. 7 Case C-377/98 Kingdom of the Netherlands v European Parliament and Council of the European Union [2001] EU:C:2001:523. 8 Notice dated 1 July 1999 concerning the amendment of the Implementing Regulations to the European Patent Convention [1999] OJ EPO 8–9/1999, 573–582; EPC rr 26–29. 9 art 33(1)(c) EPC; art 172 EPC. 10 Opinion 1/09 in European and Community Patents Court [2011] EU:C:2011:123; RJ Aerts, ‘The Patenting of Biotechnological Inventions in the EU, the Judicial Bodies Involved and the Objectives of the EU Legislator’ (2014) 36(2) European Intellectual Property Review 88. 11 art 19(1) TEU; art 267 TFEU; Opinion 1/09, ibid, para 66; Judge Allan Rosas of the Court of Justice noted that Opinion 1/09 is of constitutional significance and one of the most important decisions of the past 10 years, since it emphasizes the role of the national Union judiciaries in the Union judicial system <http://ipkitten.blogspot.nl/2014/04/fordham-report-2014-european-unitary.html> accessed 26 June 2014. 12 The Boards of Appeal and the Enlarged Board of Appeal are set up within the EPO (art 15 EPC). 13 cf Opinion 1/09 (n 10) paras 71, 79, 80, 84, 85, in which the CJEU referred to the fact that a court institutionally and judicially outside of the Union legal framework cannot take the place of the courts and tribunals of Union Member States pursuant to art 267 TFEU. 14 G 2/06 Stem Cells (WARF) [2008] EP:BA:2008:G000206.20081125, reasons 11. 15 art 23(3) EPC; T 2221/10 Culturing Stem Cells (Technion) [2014] EP:BA:2014:T222110.20140204, reasons 38, 39; G 2/02 Priorities from India (Astrazeneca) [2004] EP:BA:2004:G000202.20040426, reasons 8.6; Guidelines for Examination in the EPO, November 2017, pt G – ch II-22, 5.3. 16 art 267 TFEU. 17 RJ Aerts, ‘Biotechnology Patenting Caught Between Union Law and EPC Law: European Bundle Patents, Unitary Patents and Intentional Harmonization of Decisions in the Internal Market’ (2016) 6(3) Queen Mary Journal of Intellectual Property 301, 302. 18 International Convention for the Protection of New Varieties of Plants of 2 December 1961, revised by Acts of 10 November 1972, 23 October 1978 and 19 March 1991. 19 Consolidated cases G 2/07 and G 1/08 Essentially Biological Processes (Tomato I and Broccoli I) [2010] EP:BA:2010:G000207.20101209, EP:BA:2010:G000108.20101209, reasons 4, 5, headnote 1. 20 ibid, Order answer to question 2; Ch Brabin, ‘Intellectual Property Law in the Realm of Biology: Striking the Right Balance’ (2014) 36(11) European Intellectual Property Review 691. 21 Consolidated cases G 2/12 and G 2/13 Tomato II and Broccoli II [2015] EP:BA:2015:G000212.20150325, EP:BA:2015:G000213.20150325, Order 1–3; a plant variety remains excluded from patentability. 22 P8-TA-PROV(2015)0473: European Parliament Resolution of 17 December 2015 on patents and plant breeders’ rights, 2015/2981 (RSP). 23 Commission Notice (n 4), C 411/4. 24 ibid, C 411/7. 25 ibid, C 411/6. 26 European Patent Office, ‘EPO Stays Proceedings in Certain Biotechnology Cases’ (12 December 2016) <https://www.epo.org/news-issues/news/2016/20161212.html> accessed 22 December 2016. 27 European Patent Office, ‘EPO Clarifies Practice’ (n 4); European Patent Office, Official Journal (n 4). 28 European Patent Office, ‘EPO Clarifies Practice’, ibid; Commission Notice (n 4), C 411/4. 29 RJ Aerts, ‘The Legitimacy of Patent Law-making in Europe and the US - A Tentative Comparison’ (2007) 38(2) International Review of Intellectual Property and Competition Law 165–182. 30 O Bossung, ‘A Union Patent Instead of the Community Patent – Developing the European Patent into an EU Patent’ (2003) 34(1) International Review of Industrial Property and Copyright Law 14. 31 Brabin (n 20). 32 Florica Rus, ‘More on Broccoli, Tomatoes, and the Patentability of a Plant or Animal Obtained by Means of an Essentially Biological Process’ (2017) <http://ipkitten.blogspot.com.es/2017/07/more-on-broccoli-tomatoes-and.html> accessed 25 November 2017. 33 F Baldan and E Van Zimmeren, ‘The Future Role of the Unified Patent Court in Safeguarding Coherence in the European Patent System’ (2015) 52 Common Market Law Review 1564; Interview of 29 October 2015 by JUVE with Prof. Dr Siegfried Bross <http://www.juve.de/nachrichten/namenundnachrichten/nachrichtrecht/2015/10/epa-disziplinarverfahren-verwaltungsrat-und-battistelli-handeln-ohne-rechtliche-grundlage> accessed 2 January 2016; T Bausch, ‘The Rule of Law, the EPO and the Ugly Writing on the Wall’ (Kluwer Patent Blog, 25 May 2017) <http://patentblog.kluweriplaw.com/2017/05/25/rule-law-epo-ugly-writing-wall>accessed 25 November 2017; Kluwer UPC News blogger, ‘EPC, EPO and UPCA Lack Guarantees for Democracy, Rule of Law and Human Rights’ (Kluwer Patent Blog, 26 October 2017) <http://patentblog.kluweriplaw.com/2017/10/26/epc-epo-and-upca-lack-guarantees-for-democracy-rule-of-law-and-human-rights/> accessed 25 November 2017. 34 See n 15. 35 See n 3; Prosecution file of EP 1948791, Communication of 29 January 2016, para 13; prosecution file of EP 2049043, Communication of 14 October 2015, paras 1.3, 1.4. 36 International Stem Cell Corp v Comptroller General of Patents [2013] EWHC 807 (Ch), 17 April 2013. 37 cf Aerts (n 10) 93, 94. 38 RJ Aerts, ‘The Unitary Patent and the Biotechnology Directive: Is Uniform Protection of Biotechnological Inventions Ensured?’ (2014) 36(9) European Intellectual Property Review 584–587. 39 Decision T 2221/10 (n 15), reasons 44; prosecution file of EP 1948791, Communication of 16 July 2014, para 10.3; Case C-34/10 Brüstle v Greenpeace [2011] EU:C:2011:669, paras 45, 51; Baldan and Van Zimmeren (n 33) 1550, and references cited therein. 40 J Straus, The Present State of the Patent System in the European Union as Compared with the Situation in the United States of America and Japan (Office for Official Publications of the European Communities 1997) IX; ‘EPO Takes an ‘About Turn’ on the Patentability of Products Obtained by Essentially Biological Processes’ <http://ipkitten.blogspot.com.es/2017/07/epo-takes-about-turn-on-patentability.html> accessed 25 November 2017. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Property Law & Practice Oxford University Press

The European Commission’s notice on Directive 98/44 and the European Patent Organization’s response: the unpredictable interaction of EU and EPC law

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Abstract

The author Rob J. Aerts, Dr, MA is European and Dutch Patent Attorney and Director of Intellectual Property at Tigenix SAU in Madrid. This article Since the Biotech Directive (Directive 98/44), the patentability of biotechnological inventions in Europe has been governed by two separate and unrelated legal systems, namely European Union law and European Patent Convention (EPC) law. Given their different legal status, the two systems are not always fully aligned. In the past, the Court of Justice of the European Union (CJEU) found certain stem cell-related subject matter patentable, despite the initial denial of patentability under the EPC system, which took some time to align itself with the CJEU. In recent developments, the EPC system has implemented an exclusion from patentability of certain plant-related subject matter, while the CJEU has not yet decided on the matter. The latter situation may be a more serious source of concern than the stem cell case, as it cannot be excluded that the CJEU could ultimately render decisions at least partially contrary to the recent implementation by the EPC system. Should this happen, patent applicants and patentees may lose European patent rights irrevocably, because the EPC system does not provide for any form of legal redress. Ever since the adoption of the Biotechnology Directive (Directive 98/44; Biotech Directive) by the European Union (Union),1 and the subsequent incorporation of its provisions in the Implementing Regulations of the EPC,2 the patentability of biotechnological inventions has been governed by a hybrid system and has consequently been subject to a certain degree of legal uncertainty exposing a lack of straightforward harmonization. The recent responses by the European Patent Office (EPO) and the Administrative Council of the European Patent Organization to the European Commission’s interpretation of certain articles of the Biotech Directive illustrate the unpredictable nature of the interaction between Union law and EPC law. This article analyses these developments, showing that a certain level of at least temporary legal uncertainty on what is patentable and what is not in the field of biotechnology appears inherent to the hybrid system of European patent law. While in the past legal uncertainty was caused by the fact that it took some time for the European Patent Office (EPO) to adapt to the new case law of the Court of Justice of the European Union (CJEU) allowing the patentability of parthenotes (a type of human embryonic stem cells3), recent developments bring about the opposite situation: the Administrative Council of the European Patent Organization has made a decision on exclusion from patentability of plants obtained by a breeding method, based on an opinion by the European Commission (Commission), but it is presently unknown whether the CJEU will actually follow the opinion of the Commission. The Commission’s opinion is not binding: only the CJEU is competent to interpret Union law, and the Commission has indicated that it may change its advice in the future following the CJEU’s intervention.4 This last situation may be more troublesome than the stem cell scenario, since in the case of plant-related inventions rights may be lost irrevocably, whereas future developments and decisions may hold these rights valid. The same provisions in Union law and European Patent Convention law The Biotech Directive was promulgated by the Council and the European Parliament to harmonize patent protection throughout the Member States of the Union and to maintain and encourage investment in the field of biotechnology.5 During the legislative process, there was a strong democratic influence exercised by the European Parliament, which rejected a first version of the Directive and agreed only with a second amended version.6 Furthermore, the legitimacy of the Directive under Union law has been thoroughly tested and approved by the CJEU in the action for annulment initiated by the Kingdom of the Netherlands.7 Subsequently, provisions of the Biotech Directive have been literally incorporated in the Implementing Regulations to the European Patent Convention (EPC) by the Administrative Council, representing both Union Contracting States and non-Union Contracting States.8 Also, rule 26(1) of the Implementing Regulations states that the Biotech Directive ‘shall be used as a supplementary means of interpretation’. However, the rules are subordinate to the Articles of the EPC (Article 164(2) EPC). The insertion of the provisions of the Biotech Directive in the rules of the EPC was performed by the Administrative Council with the best intentions, since the Council can only amend the Implementing Regulations, not the articles of the EPC themselves (this would require a much more drastic measure, namely a Diplomatic Conference of the Contracting States).9 Thus, the original articles of the Biotech Directive have a totally different status under Union law compared to the same provisions incorporated in the Implementing Regulations to the EPC under EPC law, where the articles of the EPC prevail. The incorporation of provisions of the Biotech Directive does not mean that Union law was somehow implemented in the EPC.10 It follows from Opinion 1/09 of the CJEU that the only guardians of the EU legal order are the courts and tribunals of the Member States in collaboration with the CJEU, to which questions on the interpretation of Union law are referred by the courts of the Member States.11 The EPO and the Boards of Appeal are part of a legal order that is separated from the Union legal order.12 Boards of Appeal are institutionally and judicially outside of the Union legal framework, and they cannot take the place of courts and tribunals of EU Member States.13 Consequently, it is impossible for the Boards to refer questions on the interpretation of Union law, such as the Biotechnology Directive, to the CJEU.14 EPO Boards of Appeal apply EPC law, and decisions by the CJEU are not legally binding on either the Boards of Appeal or the EPO.15 In contrast, the courts and tribunals of EU Member States can (or, given the circumstances, must) refer questions on the interpretation of provisions of the Biotechnology Directive to the CJEU, and the rulings of the CJEU are binding on those courts and tribunals.16 This governance of the patenting of biotechnological inventions in Europe by two separate and unrelated legal systems has resulted both in the tendency of each system to go in its own direction and in attempts to try and harmonize biotech patent law in Europe.17 The definition of what subject matter in the field of biotechnology is patentable and what is not has become rather unpredictable. Recent developments in the field of plant-related inventions illustrate this phenomenon. Decisions of the Enlarged Board of Appeal in the field of plant-related inventions From the onset of European patent law, the classic process of plant breeding by crossing and selection of plants has in principle been excluded from patentability, because intellectual property rights related to plant breeding are regulated by a separate body of law, namely plant variety protection (UPOV Convention).18 The relevant provisions here are Article 53(b) EPC and Article 4(1)(b) Biotech Directive, which hold that ‘essentially biological processes for the production of plants or animals’ shall not be patentable. Importantly, the Biotech Directive in Article 2(2) defines a process as ‘essentially biological if it consists entirely of natural phenomena such as crossing or selection’. This provision was transposed literally in rule 26(5) EPC. In its combined decisions G 2/07 and G 1/08 (‘Broccoli/Tomato I’) on the precise meaning of the term ‘essentially biological process’, the Enlarged Board of Appeal of the EPO made a thorough investigation of the interpretation of rule 26(5) EPC, and decided that this rule did ‘not give any useful guidance’ and in its final decision ignored the rule, and interpreted Article 53(b) EPC solely ‘on its own authority’: according to the EPC, a rule is subordinate to an article. The Enlarged Board of Appeal ruled that in principle an ‘essentially biological process’ entails sexually crossing the whole genomes of plants and subsequently selecting plants.19 The disregard of Article 2(2) of the Biotech Directive by the Enlarged Board of Appeal is the consequence of the lawmaking process of the Administrative Council, which can only amend rules. However, while the Enlarged Board of Appeal can ignore the provision in the Implementing Regulations taken from Article 2(2) Biotech Directive, the CJEU in a relevant referral would most likely give an interpretation of this provision. This indicates the tension between the two legal systems: we do not know how the CJEU would interpret the term ‘essentially biological process’ taking into account Article 2(2) Biotech Directive until the question is referred to that court, and the Boards of Appeal and the Enlarged Board of Appeal of the EPO cannot refer such a question to the CJEU, unlike courts of EU Member States. The CJEU might, for instance, come to a conclusion that differs from the one of the Enlarged Board of Appeal, and rule that essentially biological processes involving sophisticated technical steps are not excluded from patentability since Article 2(2) of the Biotech Directive only excludes processes consisting entirely of natural phenomena such as crossing or selection. In contrast, the Enlarged Board of Appeal has decided that a step of a technical nature assisting in a crossing and selection process does not mean that the exclusion from patentability can be circumvented.20 After decisions G 2/07 and G 1/08, the Enlarged Board of Appeal investigated, in decisions G 2/12 and G 2/13 (‘Broccoli/Tomato II’), whether plant products obtained by an essentially biological process are patentable or not. After extensive analysis, taking into account the preparatory work of the Biotech Directive and Article 4(2) of the Directive (which refers to the patentability of plant products), the Enlarged Board of Appeal concluded that in principle there was no reason to exclude plant products from patentability, even when obtained by an essentially biological process which itself is excluded from patentability. Such product-by-process claims should be allowable.21 However, the situation in EU Member States may differ: once again in these states the ultimate decision, on whether the prohibition of patentability of an essentially biological process should be extended to the plant product obtained by the process, depends solely on a referral of the appropriate question to, and a ruling by, the CJEU. The Commission's notice and the response by the European Patent Organization The European Parliament has always been critical of patent protection for plants, and, in its role as a democratic institution within the Union, the Parliament asked the Commission to advise on the interpretation of certain provisions of the Biotech Directive, and in particular on the patentability of plants obtained by an essentially biological process.22 In its advice, the Commission emphasized that only the CJEU can decide on the matter: the Union is based on the rule of law and there is a separation of powers between the institutions.23 The Commission took Article 4(2) Biotech Directive into consideration, and in particular the preparatory work of the Directive, and concluded, in contrast to the Enlarged Board of Appeal, that it was the intention of the lawmakers of the Biotech Directive to exclude from patentability plant products obtained by an essentially biological process.24 The Commission concluded that Article 4(2) is to be interpreted as an exception, deeming patentable a plant invention if the technical feasibility of the invention is not confined to a particular plant variety, an example being the case of a gene inserted into the genome of plants (ie the technical process of genetic engineering).25 After the Commission issued its notice, the EPO stayed all examination and opposition proceedings in which the invention is that a plant was obtained by an essentially biological process.26 Subsequently, the Administrative Council took the notice of the Commission into consideration and decided almost unanimously to follow the advice of the Commission on the interpretation of Union law. The Administrative Council implemented the Commission’s advice in the new rule 28(2) of the EPC27: ‘Under Article 53(b), European patents shall not be granted in respect of plants or animals exclusively obtained by means of an essentially biological process.’ The Administrative Council indicated that this implementation ‘safeguards uniformity in harmonized European patent law’, although the Commission had cautioned that Union law itself is not harmonized on this point and the notice stated that the Commission’s advice ‘does not prejudge any future position of the Commission on the matter’ since only the CJEU is competent to interpret Union law.28 After the disregard by the Enlarged Board of Appeal, in decisions G 2/07 and G 1/08, of rule 26(5) EPC and of the comparable provision in Union law defining ‘essentially biological processes’ as consisting entirely of natural phenomena such as crossing or selection, the recent decision of the Administrative Council additionally seems to increase uncertainty in the field of patenting of plant-related inventions: the Administrative Council has not only introduced into an intergovernmental treaty—the EPC—a non-binding advice by a Union institution about Union law, but it has also, within the EPC system, overruled the decisions G 2/12 and G 2/13 of the Enlarged Board of Appeal on the patentability of plant products. In principle, it cannot be excluded that the Boards of Appeal may be somewhat hesitant to apply the new rule 28(2), a situation that would introduce further uncertainty. The interaction of the two legal systems and consequences for the validity of rights The EPC provides a self-contained system, and the lawmaking process by the Administrative Council cannot be tested before an independent court like the legitimacy of lawmaking under Union law can be tested before the CJEU.29 It has been questioned elsewhere whether the Administrative Council was not ‘overstepping its competence’ by taking elements of Union law and plainly inserting them in the rules of the EPC.30 It remains unknown how the CJEU would ultimately decide on the interpretation of the term ‘essentially biological process’ being defined as a process that `consists entirely of natural phenomena', and whether the CJEU would endorse in full the advice given by the Commission on the exclusion of plant products obtained by an essentially biological process from patentability, if such questions were referred to the court. The CJEU could, for instance, interpret the term ‘essentially biological process’ in a manner different from that of the Enlarged Board of Appeal of the EPO, which in turn may influence the circumstances under which the products obtained by such a process are patentable or not. In case an essentially biological process other than the traditional breeding methods that Article 2(2) Biotech Directive seems to refer to—eg a crossing or selection process assisted by sophisticated technical steps—was deemed patentable, the products thus obtained may be deemed patentable as well.31 It is estimated that, since 1980, about 180 European patents that deal with traditional breeding methods have been granted by the EPO, and the validity of these patent claims has now become unclear.32 Likewise, the fate of European patent applications claiming plants obtained by an essentially biological process is uncertain: future developments and decisions under Union law may partly or entirely come to a different conclusion than the exclusion from patentability now implemented by the Administrative Council in the new rule. There are no legal means of redress and there is no independent judicial review for the loss of rights when a patent application or a patent is respectively refused or revoked under EPC law. It was noted before that this lack of legal remedy is a fundamental shortcoming of the European patent system.33 The EPO is not bound by Union law, and the Office has stated repeatedly that it is a separate legal order from the Union and that it is not a member of the Union. At most, it can find the decisions of the CJEU ‘persuasive’.34 The situation with respect to plant-related inventions represents the reverse of the situation that existed for some time with respect to the patentability of human embryonic stem cells. In respect to the latter, the EPO had to adapt to the case law of the CJEU in which patentability was broadened. In decision C-364/13, the CJEU ruled that human parthenotes (artificially activated unfertilized egg cells) that are incapable of developing into human beings are in principle patentable subject matter. It took a while for the Examining Division of the EPO to adjust its practice and to allow patents on parthenotes in line with the decision of the CJEU.35 Importantly, it should be noted that if the question on the patentability of parthenotes had not been referred to the CJEU by means of a pending national patent application,36 it is likely that the EPO would have maintained its refusal of European patent applications claiming parthenotes. Regarding plant-related inventions, the Administrative Council of the European Patent Organization has made a decision on patentability based on an opinion of the Commission which could be modified by the Commission in the future, and it is currently unknown whether the CJEU will actually follow all elements of this opinion. This situation would appear to be much more disquieting than the developments in the field of patenting of stem cells, since it cannot be entirely excluded that plant-related patent rights be lost without any possibility of recovery, even if that would encompass a violation of Union law.37 As a prerequisite for true harmonization of patent law in the field of biotechnology in Europe, the provisions literally transposed from the Biotech Directive should at least have been inserted in the articles of the EPC rather than in the rules. Furthermore, for true harmonization, a means of referral of appropriate questions by the EPC system to the CJEU on the interpretation of the Biotech Directive provisions should exist—a mechanism presently unimaginable, since the EPC legal system is not part of the Union law system. Further, upon the introduction of the Unitary Patent the situation will still not improve, since the EPC-governed granting of Unitary Patents still does not allow the possibility for the EPO to submit questions to the CJEU.38 Although the two legal systems closely monitor each other and undoubtedly attempt to harmonize biotech patent law in Europe,39 patent applicants and patentees have to live with the legal uncertainty resulting from the fact that biotech patent law in Europe is governed by two separated and unrelated legal systems. This legal uncertainty is in the best case temporary, but it might be more severe and may require considerable time before appropriate questions are referred to the CJEU and decided by the court. In the meanwhile, the existence of valid rights, or otherwise, remains uncertain. As was noted before, patent law within Europe is currently subjected to diverging rules made by different bodies, and as a consequence legal disharmony cannot be avoided.40 Footnotes 1 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L213/13–21. 2 Convention on the grant of European patents of 5 October 1973, revised by Acts of 17 December 1991 and 29 November 2000, text as adopted by decision of the Administrative Council of 28 June 2001. 3 Case C-364/13 International Stem Cell Corporation (ISCC) v Comptroller General of Patents [2014] EU:C:2014:2451; De Clercq & Partners, ‘A New Tool in the Analysis of the Patentability of Human Stem Cells: “To Have or Not to Have the Inherent Capacity to Develop Into a Human Being,”’ Newsletter (December 2015) 4–5. 4 European Patent Office, ‘EPO Clarifies Practice in the Area of Plant and Animal Patents’ (29 June 2017) <https://www.epo.org/news-issues/news/2017/20170629.html> accessed 30 June 2017; European Patent Office, Official Journal (31 July 2017) A62 <http://www.epo.org/law-practice/legal-texts/official-journal/2017/a62.html> accessed 28 August 2017; Official Journal of the European Union, ‘Commission Notice on certain articles of Directive 98/44/EC of the European Parliament and of the Council on the legal protection of biotechnological inventions’ [2016] 2016/C 411, 8 November 2016, 3–14. 5 See n 1, Preamble 1, 3. 6 I Schneider, ‘Governing the Patent System in Europe: the EPO’s Supranational Autonomy and Its Need for a Regulatory Perspective’ (2009) 36(8) Science and Public Policy 619–629. 7 Case C-377/98 Kingdom of the Netherlands v European Parliament and Council of the European Union [2001] EU:C:2001:523. 8 Notice dated 1 July 1999 concerning the amendment of the Implementing Regulations to the European Patent Convention [1999] OJ EPO 8–9/1999, 573–582; EPC rr 26–29. 9 art 33(1)(c) EPC; art 172 EPC. 10 Opinion 1/09 in European and Community Patents Court [2011] EU:C:2011:123; RJ Aerts, ‘The Patenting of Biotechnological Inventions in the EU, the Judicial Bodies Involved and the Objectives of the EU Legislator’ (2014) 36(2) European Intellectual Property Review 88. 11 art 19(1) TEU; art 267 TFEU; Opinion 1/09, ibid, para 66; Judge Allan Rosas of the Court of Justice noted that Opinion 1/09 is of constitutional significance and one of the most important decisions of the past 10 years, since it emphasizes the role of the national Union judiciaries in the Union judicial system <http://ipkitten.blogspot.nl/2014/04/fordham-report-2014-european-unitary.html> accessed 26 June 2014. 12 The Boards of Appeal and the Enlarged Board of Appeal are set up within the EPO (art 15 EPC). 13 cf Opinion 1/09 (n 10) paras 71, 79, 80, 84, 85, in which the CJEU referred to the fact that a court institutionally and judicially outside of the Union legal framework cannot take the place of the courts and tribunals of Union Member States pursuant to art 267 TFEU. 14 G 2/06 Stem Cells (WARF) [2008] EP:BA:2008:G000206.20081125, reasons 11. 15 art 23(3) EPC; T 2221/10 Culturing Stem Cells (Technion) [2014] EP:BA:2014:T222110.20140204, reasons 38, 39; G 2/02 Priorities from India (Astrazeneca) [2004] EP:BA:2004:G000202.20040426, reasons 8.6; Guidelines for Examination in the EPO, November 2017, pt G – ch II-22, 5.3. 16 art 267 TFEU. 17 RJ Aerts, ‘Biotechnology Patenting Caught Between Union Law and EPC Law: European Bundle Patents, Unitary Patents and Intentional Harmonization of Decisions in the Internal Market’ (2016) 6(3) Queen Mary Journal of Intellectual Property 301, 302. 18 International Convention for the Protection of New Varieties of Plants of 2 December 1961, revised by Acts of 10 November 1972, 23 October 1978 and 19 March 1991. 19 Consolidated cases G 2/07 and G 1/08 Essentially Biological Processes (Tomato I and Broccoli I) [2010] EP:BA:2010:G000207.20101209, EP:BA:2010:G000108.20101209, reasons 4, 5, headnote 1. 20 ibid, Order answer to question 2; Ch Brabin, ‘Intellectual Property Law in the Realm of Biology: Striking the Right Balance’ (2014) 36(11) European Intellectual Property Review 691. 21 Consolidated cases G 2/12 and G 2/13 Tomato II and Broccoli II [2015] EP:BA:2015:G000212.20150325, EP:BA:2015:G000213.20150325, Order 1–3; a plant variety remains excluded from patentability. 22 P8-TA-PROV(2015)0473: European Parliament Resolution of 17 December 2015 on patents and plant breeders’ rights, 2015/2981 (RSP). 23 Commission Notice (n 4), C 411/4. 24 ibid, C 411/7. 25 ibid, C 411/6. 26 European Patent Office, ‘EPO Stays Proceedings in Certain Biotechnology Cases’ (12 December 2016) <https://www.epo.org/news-issues/news/2016/20161212.html> accessed 22 December 2016. 27 European Patent Office, ‘EPO Clarifies Practice’ (n 4); European Patent Office, Official Journal (n 4). 28 European Patent Office, ‘EPO Clarifies Practice’, ibid; Commission Notice (n 4), C 411/4. 29 RJ Aerts, ‘The Legitimacy of Patent Law-making in Europe and the US - A Tentative Comparison’ (2007) 38(2) International Review of Intellectual Property and Competition Law 165–182. 30 O Bossung, ‘A Union Patent Instead of the Community Patent – Developing the European Patent into an EU Patent’ (2003) 34(1) International Review of Industrial Property and Copyright Law 14. 31 Brabin (n 20). 32 Florica Rus, ‘More on Broccoli, Tomatoes, and the Patentability of a Plant or Animal Obtained by Means of an Essentially Biological Process’ (2017) <http://ipkitten.blogspot.com.es/2017/07/more-on-broccoli-tomatoes-and.html> accessed 25 November 2017. 33 F Baldan and E Van Zimmeren, ‘The Future Role of the Unified Patent Court in Safeguarding Coherence in the European Patent System’ (2015) 52 Common Market Law Review 1564; Interview of 29 October 2015 by JUVE with Prof. Dr Siegfried Bross <http://www.juve.de/nachrichten/namenundnachrichten/nachrichtrecht/2015/10/epa-disziplinarverfahren-verwaltungsrat-und-battistelli-handeln-ohne-rechtliche-grundlage> accessed 2 January 2016; T Bausch, ‘The Rule of Law, the EPO and the Ugly Writing on the Wall’ (Kluwer Patent Blog, 25 May 2017) <http://patentblog.kluweriplaw.com/2017/05/25/rule-law-epo-ugly-writing-wall>accessed 25 November 2017; Kluwer UPC News blogger, ‘EPC, EPO and UPCA Lack Guarantees for Democracy, Rule of Law and Human Rights’ (Kluwer Patent Blog, 26 October 2017) <http://patentblog.kluweriplaw.com/2017/10/26/epc-epo-and-upca-lack-guarantees-for-democracy-rule-of-law-and-human-rights/> accessed 25 November 2017. 34 See n 15. 35 See n 3; Prosecution file of EP 1948791, Communication of 29 January 2016, para 13; prosecution file of EP 2049043, Communication of 14 October 2015, paras 1.3, 1.4. 36 International Stem Cell Corp v Comptroller General of Patents [2013] EWHC 807 (Ch), 17 April 2013. 37 cf Aerts (n 10) 93, 94. 38 RJ Aerts, ‘The Unitary Patent and the Biotechnology Directive: Is Uniform Protection of Biotechnological Inventions Ensured?’ (2014) 36(9) European Intellectual Property Review 584–587. 39 Decision T 2221/10 (n 15), reasons 44; prosecution file of EP 1948791, Communication of 16 July 2014, para 10.3; Case C-34/10 Brüstle v Greenpeace [2011] EU:C:2011:669, paras 45, 51; Baldan and Van Zimmeren (n 33) 1550, and references cited therein. 40 J Straus, The Present State of the Patent System in the European Union as Compared with the Situation in the United States of America and Japan (Office for Official Publications of the European Communities 1997) IX; ‘EPO Takes an ‘About Turn’ on the Patentability of Products Obtained by Essentially Biological Processes’ <http://ipkitten.blogspot.com.es/2017/07/epo-takes-about-turn-on-patentability.html> accessed 25 November 2017. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)

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Journal of Intellectual Property Law & PracticeOxford University Press

Published: Oct 1, 2018

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