The Enlarged Board of Appeal G 3/19 recently confirmed a decision that plants and animals derived from an 'essentially biological process' are not patentable. But this has caused controversy. Jörg Thomaier, head of IP at life sciences conglomorate Bayer, talks to JUVE Patent about how he thinks the new regulation could curtail innovation in European agriculture. The culmination of this long-running debate, Thomaier argues, could also compromise the integrity of the Enlarged Board of Appeal.
28 May 2020 by Amy Sandys
JUVE Patent: What is the significance of the G3/19 decision for the agricultural industry?
Jörg Thomaier: The decision excludes more plants from patenting, and patenting always has an impact. The decision on rule 28 covers everything with marker-assisted breeding. On one hand using technical help provides much quicker solutions to certain problems in the agricultural sector. But to use technical breeding is more expensive and burdensome than regular breeding. So, you have to invest more to get to the new kind of plant. And if you get this new kind of plant without protection, it’s hard to get the additional outlay back from the market by higher pricing. This may decrease the motivation and speed of future innovation, which is needed in the agricultural sector. What this sector, as any other sector needs, is legal certainty regarding what is patentable. It also needs certainty that (bio-)technological processes and the results thereof are, and remain, patentable.
Is the decision a surprise, considering its potential impact?
From a legal perspective, I’m really surprised and disappointed by the decision, because I think the Enlarged Board of Appeal did not exercise its duty. In substance it seems that it’s a political question. While I strongly disagree, there are some stakeholders of the opinion that the patenting of plants needs to be very restrictive. Some even think that there shouldn’t be any patents on plants or animals at all. So, the overall landscape may be depicted by the judgment.
“I’m surprised and disappointed. The Enlarged Board of Appeal did not exercise its duty”
In the long run, it’s a question of whether society sees the benefits of innovation in the field of breeding. It relies on significant investments and is – like any investment in innovation in any other field – only possible with the patent system available to provide legal protection. But ultimately, it’s a democracy. If people elect the government because they do not want to allow these kinds of patents, then that’s politically and legally fine. That’s how policy and societies work. I can think it’s wrong and can raise my voice. What we are more concerned about are the long-term implications on innovation in this field and whether all players can deliver new innovations and products.
What will the long-term effect of G 3/19 be?
There seems to be a general mistrust in research and innovation in society. Technology is increasingly considered in many developed countries as the enemy instead of the solution. That speaks volumes about the lack of understanding on how patents benefit innovation and consumers. There is also a chance that there will be no patents on plants at all. That could be the next step reached from people hostile to plant patents. On the other hand, we might be successful in getting, for example, a diplomatic conference changing the law, explicitly allowing for these patents. That’s a very long shot, to reverse it. We first have to get the general public into a factual discussion on innovation, patents and the benefits. This is not a sprint, but rather a marathon. Eventually, it’s a legal and political matter so therefore there may be opportunities along the way.
“There is a chance there will be no patents on plants at all”
But legally speaking, for this patent matter it is clearly the end of the discussion around G 3/19. There is the hope though, that eventually in the long-term, the benefits of biotechnological innovation and what it can do for society might be recognised.
The Administrative Council is being accused of compromising its independence through its upholding of Rule 28. How has the independence of the Enlarged Board of Appeal developed over the past few years?
Firstly, the reform of the Boards of Appeal system in general tried to give it more independence. It is located separately from the EPO, it has its own president but because it can’t change the contract it is still connected to the EBO and the EPO president. Previously, I was satisfied about its independence. But this decision has really raised questions. The Enlarged Board of Appeal did not do its job of scrutinising a new rule against the existing regulations. And the decision which came out is a 100% political decision, and a 100% political decision is not a sign of independence. Whether this is because they feel pressure from the EPO leadership I don’t know. It raises the question again of whether the Enlarged Board of Appeal is really independent.
What consequence might the increased political intervention have on the Boards of Appeal?
The Enlarged Board of Appeal is not a court anymore. So for the users, the system is much less reliable. A court can’t just consider a question. It looks at a case from a legal perspective and supplies a legal decision. But you have to keep in mind that political pressure may push it into another direction. Then you are done, even if you are legally on the right side.
“The Enlarged Board of Appeal is not a court anymore”
Does the G 3/19 decision set a precedent for the future Boards of Appeal cases?
I hope not, but I fear it does. It’s a precedent for future decisions as soon as they do have a political dimension. If the question is purely legal, regarding a factual matter based on existing law where two technical boards of appeal have a different opinion, then the outcome may be the same as the past. But questions like this mean the decision itself has a deeper impact.
Really, this gives the Administrative Council freedom to issue rules as they want. If such a rule is called into question by some stakeholders, it may end up before the Enlarged Board of Appeal. Then the board may decide the same way again, according to policy guidelines. So there’s no real checks and balances by an independent court anymore. It could undermine trust in the system.
How important would a UPC be in maintaining the independence of the Enlarged Board of Appeal?
A similar decision would end up under the scrutiny of the UPC and then be overturned. This is because a court such as the UPC would act independently in accordance with the law. So the structure and influences in the European patent system will still be the same, but a UPC would counterbalance it because there’s a means of defence.
Another option would be a deep reform of the EPC to cut off the Enlarged Board of Appeal from the EPO or to allow for referrals to the UPC or EU court system to have the possibility for review. A sign of Enlarged Board of Appeal independence would be if it found a reason in its own jurisprudence as to why Rule 28 is OK. But not relying on Rule 28 and the opinion of the Administrative Council, but forming its own opinion? That would be the task of a court. I still wouldn’t like the decision, but I would understand it as the decision of an independent court. I still accept it, but I doubt the independence. The UPC would allow an independent counterbalance.
In your opinion, how likely is the UPC to ever emerge?
Being a big fan of the UPC anyhow, with Bayer one of the parties pushing for the UPC, I’m pretty unhappy. It’s very difficult right now. I’m not too concerned about the UK’s decision on leaving the EU will have a negative impact on this. There would still be reasons why a UPC could work. But now we need to re-ratify it in Germany. I see a chance to go ahead, but it will be difficult. My expectation is we will not see it as quickly as we would have hoped.
Regarding Bayer itself, the company recently had a big merger with Monsanto. How has this changed the IP department at Bayer?
In our IP team, I have a health, pharma and consumer team. I have a crop protection and crop science team doing patents in this area. This is now larger and has two sub-divisions. It is mainly crop protection or chemicals driving the team here in Germany, but the main seeds and traits IP is done out of Saint Louis. However, both are part of the same department. So the larger crop-science IP department now has two main columns, one is crop protection and one is seeds and traits. They belong together in one department.
Bayer’s IP department does much work in-house. Monsanto is the opposite. How do you bring the culture together?
The Bayer IP model is more cost effective. In the past, the legacy company was strongly present in Europe and that was a different set-up legally in comparison to the US. So, it won’t be 100% the same but as far as we can we will go that way. If you look at the benchmark, the Bayer legacy company was much lower in total cost per patent than formerly at Monsanto. Analysis shows this is mainly driven by the huge costs of outside counsel. We will not be able to get all of this solved for diverse reasons but that’s the direction we’re going. We need more efforts in IP to bring the two cultures together because the number of US-based colleagues is much higher than before. The differences between both sides of the Atlantic are now more visible in our organisation.
“The Bayer IP model is cost-effective”
Is now the right time for Bayer to renew its panel of law firms?
As a large company we strive to have a focused set of law firms working for us. It’s better for them, it’s a clearer relationship; it’s better for us because we have fewer firms so we gain better rates. It’s just a question of fairness now to offer to include incumbents from both legacy sides in the new company.
Is there a set time period in which to achieve the new panel?
Because we want to do it right there is no fixed time frame, but for IP we’ll try to hit the end of next year, or even earlier. In IP, both countries had different set-ups and geographical scope. In some countries, there was just one legacy firm present and working with a law firm, so it’s a renegotiating price. In some countries, both legacy companies were present and working with law firms – in some cases it is a real convergence of the firms.
Has Bayer made its decision regarding work with law firms in Germany?
No. We’re going through the markets according to their importance from our patent business perspective. In Germany we do 98% of the work in-house so there isn’t a big turnover with German law firms. However, Germany is not at the forefront of the process.
This interview was conducted by Amy Sandys and Christina Schulze.