Biotechnology advocates are warning of dire consequences for theindustry's ability to protect intellectual property rights on inventionsif a legislative proposal to ban patenting of medical proceduresbecomes part of a final spending bill for the Commerce, Justice andState departments.

The House included the controversial amendment in its version of theappropriations bill approved Wednesday. The legislation now goes tothe Senate and then a House-Senate conference committee to resolvedifferences.

The amendment was offered by Rep. Greg Ganske (R-Iowa), aphysician and member of the House Commerce Committee, andwould prevent the U.S. Patent and Trademark Office (PTO) fromspending funds to issue patents for surgical or medical procedures.

The provision includes exceptions for processes that are part of apatentable product and new indications of drugs that are notpatentable but whose effect was not previously known or obvious.

The Biotechnology Industry Organization's (BIO) Chuck Ludlum,vice president of government affairs, said the amendment is vagueenough to have a potential widespread negative impact on patents forbiotechnology drugs, diagnostics, gene therapy and "anything havingto do with bacteria, viruses, fungi and tumors."

Ludlum said BIO, which battled Ganske in the House, is working inthe Senate to prevent inclusion of the amendment in itsappropriations bill.

But Ludlum warned even House approval could have a deleteriouseffect on the industry.

"It will have an immediate impact on the capital markets," he said, byundermining investor confidence in companies' ability to protectintellectual property.

Ganske's amendment, which is similar to legislation he introducedlast year, is backed by the American Medical Association and wasspurred by a court fight involving a doctor who sued anotherphysician for infringing a patent on a cataract surgical procedure. Thefederal courts ultimately rejected the plaintiff's patent claims.

Ludlum said he knows of "no case where a single doctor has enforceda medical patent against another doctor." He accused the AMA andGanske of trying to insulate physicians from patent infringementlawsuits.

However Ganske, arguing on the House floor this week, said the PTO"issues more than 100 medical procedures patents per month."

He said his amendment would not affect patentable new drugs,machinery, devices, diagnostics and biological products.

"I even added an additional exception for biological processes tomake absolutely clear this amendment does not prohibit patents ongene therapy, or other similar procedures," Ganske said.

But BIO and the Pharmaceutical Research and Manufacturers ofAmerican (PhRMA) have said interpretation of the Ganskeamendment is not as straightforward as the congressman contends.They also argued the legislation is unnecessary.

In a letter to Ganske last week, PhRMA said, "Modifying any statuteas complex as the U.S. patent code on an issue as fundamental as thescope of patentability" will create uncertainty and result in morelitigation.

"The uncertainty," PhRMA argued, "will greatly burden innovatorsin the medicinal arts who already face a host of technological,regulatory and marketing hurdles."

Ludlum, in a memo to BIO's membership of 700 companies, wasmore blunt. "If the Ganske amendment becomes law," he said, "vitalmedical research will stop dead in its tracks."

PhRMA also noted the patent involved in the cataract surgerylitigation was issued by mistake and the PTO is makingadministrative changes to prevent similar errors. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.