European Court of Justice Restricts Scope of Biotech Patents in Europe: Monsanto Loses Dispute on Soy Meal

Brief Summary of the Court Decision

The European Court of Justice delivered a judgment on July 6, 2010 that certainly may be seen as a breakthrough decision for European biotechnology patent law. Exactly 12 years after the European Parliament and the Council adopted European Directive 98/44/EC ("Biotech Directive"), the European Court of Justice (ECJ) in its Case C-428/08 ("Monsanto v. Cefetra") interpreted Article 9 of the Directive regarding the scope of protection for a patent on a product containing or consisting of genetic information ("gene patents").

The judgment limits patent protection of gene patents to the living biologic material, ruling out protection for processed, derivative products thereof. According to the judgment, European law does not confer patent protection if a patented DNA sequence (e.g., effecting herbicide resistance in soy plants) is merely present in a derivative (i.e., downstream) product (e.g., soybean meal) where it can no longer perform the specific function for which this DNA sequence was patented (i.e., provide herbicide resistance). This effectively establishes a purpose-bound protection for gene sequences rather than "absolute" protection.

Remarkably, the judgment not only limits the scope for future patents, but it applies retroactively, even if patents had already been applied for and granted prior to the adoption of the European Biotech Directive. The ECJ specifically investigated and confirmed that this finding is in compliance with the World Trade Organization's international "Agreement on Trade-Related Aspects of Intellectual Property Rights," Articles 27 and 30 ("TRIPS").

Judgments of the European Court of Justice are binding for all Member States of the European Union ("EU"). From now on, any national laws in the EU have to be interpreted in accordance with this ECJ judgment, effectively limiting the scope of gene patents throughout the European Union.

Obviously, the judgment has a major impact on assessing existing patent portfolios but also will affect future biotech patent practice and strategy.

Background

The ECJ decision is the culmination of a series of patent litigation actions brought by Monsanto against several EU importers of soybean meal originating in Argentina. The soybean meal in dispute was obtained from genetically modified soybean plants tolerant to the herbicide glyphosate due to the presence of a gene encoding a specific enzyme—EPSPS. Although the DNA sequence of the EPSPS gene is validly patented in several EU Member States, no patent protection existed in Argentina, and the genetically engineered soybean plants were thus cultivated and processed in Argentina without needing a license. Monsanto then tried to enforce its European patent claim on the DNA sequence against the downstream...