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January 28, 2004

riginal: Spanish
Translation: FTAA Secretariat




Name(s) Andrés Anselmo Aguayo Díaz
Organization(s) Chilean citizen
Country Chile
Contribution covers the following country(ies) or region(s): All countries.

FTAA ENTITIES (Please check the FTAA Entity(ies) addressed in the contribution)

Negotiating Group on Agriculture   Committee of Government Representatives on the Participation of Civil Society  
Negotiating Group on Competition Policy   Consultative Group on Smaller Economies  
Negotiating Group on Dispute Settlement   Technical Committee on Institutional Issues (general and institutional aspects of the FTAA Agreement)  
Negotiation Group on Government Procurement   FTAA Process (check if the contribution is of relevance to all the entities)  
Negotiating Group on Intellectual Property X    
Negotiating Group on Investment      
Negotiating Group on Market Access    
Negotiating Group on Services    
Negotiating Group on Subsidies, Antidumping and Countervailing Rights    




Do we want the FTAA to be a “Community of Values” that will transcend and give meaning to economic concerns? Or will we accept that economic concerns prevail as the absolute value? There are no two possible answers to these questions. Our societies’ socioeconomic and political evolution, the extent of this agreement, and its long-term consequences dictate that the FTAA cannot be approached from a reductionist perspective.

In Chapter XX on Industrial Property (IP), this “Community of Values” materializes in Section A on general aspects. In this section, the following are acknowledged as basic principles of IP: socioeconomic and technological development (article 1.1); the preeminence of promoting public health and access to medicines (article 1.4); the contribution of IP rights to promoting the social and economic welfare of members, through innovation, dissemination, and technology transfer among members, to the mutual advantage of technology producers and users, striking a balance between members’ rights and obligations (article 2.1). Furthermore, recognition is given to the freedom of members to protect the population’s health and nutrition, as well as the freedom to promote public interest1 in sectors significant to socioeconomic and technological development (article 3.1).

For those who aspire to creating a “Community of Values” in the Americas that is based on liberty, equality, mutual respect, and responsibility, whose ultimate objective is none other than achieving the socioeconomic welfare of its members, Section A on general aspects is of the utmost importance and positions must be firmly protected from purely economic perspectives.

The topic we wish to address in light of a “Community of Values” is a specific patent law issue, to wit: the non-patentability of genetic information (GI). Before engaging in our subject, we must place it within the proper context, bearing in mind the tenets of patent law.

Patent law emerges as a means to foster the creation of technological information. In fact, when considered in light of its economic dimension, technological information is a “public good”2, and, as such, technological information is subject to the problem of its “impossibility of appropriation”. This means that, in a market with no patent law, there is no incentive to produce technological information. Patent law corrects this flaw, creating the incentive necessary to generate information so that it may become a tradable object of property. In other words, patent law responds to a public need (market imperfections, lack of creation of technological information) and uses the creation of a specific type of property, i.e. IP, as a corrective tool.

Thus, traditionally, it has been pointed out that patent law is built upon a social agreement that balances collective interests with private interests. Society pursues welfare at large by fostering technological development. On the other hand, private individuals are motivated by the expectation of the economic rewards to be derived from patented inventions.

This social agreement materializes through mutual obligations and rights. Thus, the State will grant a patent on an invention, which is an exclusive, temporary right of use in its territory. Conversely, the private individual must publicize the invention (TRIPS, Article 29) from the onset of the patenting process, which allows third parties to use this new knowledge in other research. Once the patent expires, the invention itself may be used by third parties.

In the past, patent systems provided for the obligation to exploit the patent industrially within the territory of the country that granted the patent. Beginning in the nineties, however, this obligation began to disappear from national legislations due to heavy pressure from several technology-producing countries 3 The obligation's coup de grace came from Article 28 of the TRIPS Agreement. Eliminating this obligation changed the very nature of the patent system, turning what had been an industrial monopoly into a commercial monopoly. There being no effective exploitation in the territory of the country granting the patent, how can there be any transfer of technology? In other words, big enterprises were granted more prerogatives and guarantees, to the detriment of effective technology transfers and direct investment.

Undoubtedly, the patent system lost a significant pillar in the TRIPS Agreement and its very nature was altered intrinsically. We could think, however, that if this concession was made to technology-producing countries in exchange for mutual concessions, technology-importing countries would have had a neutral balance of power in the negotiations. Yet, the obstacle that stalks almost ten years of THE TRIPS Agreement is that, apparently, there were no mutual concessions or, if there were any at all, they were merely a siren song.

Finally, patent law, as part of a global system, should be in harmony with other values legally recognized by society, such as the protection of health, free competition, the environment and development policies for various sectors.

In summary, patent law emerges with the public purpose of promoting social welfare by fostering technological creation, and is subject to public interests, both those inherent to patent law and to law in general. This characteristic of patent law must not only be preserved in the FTAA; it must be reinforced. In other words, patent law must be included in a “Community of Values” that remains in tune with our societies’ evolutionary process.


The prohibition of patenting GI is contained in Article 1.5, letter (c) of the Patents Subsection of the draft Chapter. Both its final establishment and scope are under negotiation.

This prohibition is significant for the following three reasons:

(a) From a strictly legal standpoint, it is imperative that the non-patentability of GI be reinforced so that the patent system is not undermined and to avoid it becoming an instrument of abuse rather than of development.

(b) From a political standpoint, the non-patentability of GI entails both the affirmation of a governmental power to implement different public policies for the development of technology and certain economic sectors, such as the affirmation of a citizen's freedom to engage in certain economic activities, a power and freedom that would otherwise be lost.

(c) Finally, this prohibition is a very useful instrument to structure a healthy competition policy, which ultimately benefits the consumer. In other words, the non-patentability of GI limits the ability of large enterprises to abuse IP rights in prejudice of competition.

The fact that we support this prohibition does not mean that we reject patents on inventions based on GI. In fact, we absolutely favor the development of biotechnologies and, in particular, the use of GI in developing new products and processes. We feel, however, that patents should only protect “a concrete application” of a specific GI, but not the GI itself, which should remain in the public domain so that it may be used by the entire community.

This principle of the non-patentability of GI is shared by the great majority of experts, scientists, and politicians. The danger lies, however, in establishing it incorrectly or incompletely, which would allow for ambiguous interpretations. A notable example of this danger is European directive 98/44 regarding the legal protection of biotechnological inventions. This document was the result of 10 years of intense public debates,4 , which are still being pursued.

Article 5 of the directive refers to the patentability of the human genome and is, perhaps, its most criticized provision. The article reads as follows:

“1. The human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute patentable inventions.”

“2. An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.”

“3. The industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.”

Unfortunately, there isn’t enough space here to analyze the article in depth, but suffice it to say that subparagraph one, which affirms the principle of non-patentability, contradicts subparagraph two, which allows patentability on the condition that the gene or partial sequence be isolated from the human body or otherwise obtained through a technical process.

This determination, the fruit of intense lobbying by biotechnology enterprises, cannot be the final result. In the next section we will further examine the tenets of the non-patentability of GI.


1. The prohibition's significance to patent law.

The prohibition we are studying is an application of a broader principle: the non-patentability of discoveries. In fact, invention (not discovery) is a condition for the application of patent law. Thus, only inventions are patentable. Furthermore, an invention legitimizes patent law, wherefore there is no justification for awarding an exclusive right of exploitation to a private individual for a non-inventive activity. Consequently, any ambiguity on the matter is an attempt against the very tenets of patent law.

As indicated above, GI is not an invention; it preexists in nature. Thus, it is merely the discovery of information already present in nature.

We should point out, however, that the distinction between an invention and a discovery in the biotechnology sector is complex. This matter will be addressed very superficially for the sake of brevity, due to the confines of this work.

1.1. Distinction between Discovery and Invention

The concept of invention embodies several elements that make it a rather complex topic. Notwithstanding, it can be said that an invention is a rule or set of technical rules that make it possible to solve an industrial problem. The similarities between a discovery and an invention are many: both are human activities that increase man's knowledge. However, a discovery is generally a contemplative action that verifies causal relationships and has no immediate industrial application. On the other hand, an invention is an essentially productive action that creates relationships based on a purpose (because it aims to determine "how" to solve an industrial problem) and has a direct industrial application.

In the biotechnology sector, discovery and invention can be confused as part of one single action. This fusion is produced, once upon discovering a causal relationship, e.g. the production of a particular protein with a partial genetic sequence) a relationship of finality is established that resolves an industrial problem (e.g. the creation of a new test to detect some form of cancer). In other words, the industrial problem for which a solution is being sought (improve or invent a test) is the result of a discovered causal relationship) (the synthesis of protein from a partial sequence) having been used, in an industrial context. This example shows that a discovery can be made and an invention created in a single act.

But even in such complex cases it is possible to make a distinction between both categories. The distinction is teleological in nature. In other words, the distinction lies in the intention behind the act. If this act is performed within the context of pure research, it will be a discovery. However, if the act is performed within a technical context, the objective being to find a solution to an industrial problem, it will be both a discovery and an invention.

This conclusion leads us to ponder the following question: in those cases where the distinction between discovery and invention is not clear, does the invention patent protect the discovery itself? Or, rather, does the discovery remain in the realm of the inappropriable, for use by the public at large.

There is no ambiguous response to this question. The discovery can never again be the object of appropriation; this is the non plus ultra of intellectual property rights. Any other alternative leads to “madness”. For example, if the discovery patent is accepted, the law of gravity or mathematics could well prove to be the object of private appropriation as well. What is serious is the fact that this is not a rhetorical resource; rather, it corresponds directly to the reality. To allow the appropriation of the GI would be tantamount to allowing the appropriation of the force of gravity. Imagine the absolute power that anyone endowed with a discovery patent would enjoy.

2. The importance of prohibition for competition policies and industrial development policies and for preserving the freedom of enterprise.

In order to grasp the significance of this problem, the fact that every gene or partial sequence has multiple industrial applications and, furthermore, that the vast majority of these genes are still unknown, must be borne in mind.

The problem posed by the patentability of GI can be summarized as follows: the patent owner holding a patent of any specific GI will have a monopoly on information that has multiple applications, most of which are unknown. A patent on a specific GI, therefore creates a monopoly on all the existing and potential industrial applications originating from the patented GI.

Clearly, a patent of this nature creates an obstacle for third parties wishing to work with patented GI, in view of the fact that the results will depend on the patent holder’s wishes. This is clearly a disincentive to the research and development of applications in the area of biotechnology.

This result, which runs counter to the logic of economic efficiency, has three harmful consequences: the State loses its authority to set development and promotion policies in the biotechnology sector, citizens lose the freedom to pursue an economic activity, and finally, unjustified monopolies are established, laying the foundations for all kinds of abuses.

John Sulston5, provides an illustrative example19956 of the impact that patents have on GI. In 1995, the British Institute of Cancer Research (ICR) discovered a mutation in one of the breast cancer families that could be associated with the BRCA1 and BRCA2 genes. Subsequently, Myriad, a US company, requested a patent on both genes and created a medical analysis process based on this discovery. When it was awarded the patent, Myriad threatened to take legal action against those companies that used these genes to track breast cancer. The research on these genes by ICR and other research centers was halted as a result of this threat. In sum, the usefulness of this genetic information was reduced to a cancer detection test, and any incentive to develop much more valuable treatment therapies disappeared.

Unless GI patentability is clearly established in the FTAA, thousands of cases like the one Sulston describes will crop up across the Americas. For example, it would be disastrous for Chile if a person, either a national or a foreigner, were to patent the genes of the grape vine or salmon since this would bring any biotechnological development by other companies to a halt, not to mention the fact that overwhelming royalties, the amount and quantity of which we are not even able to predict, would be charged. The State would lose its authority to implement research development policies in the affected sectors. Individuals’ freedom of enterprise would be curtailed. And finally, it is not difficult to imagine the wide variety of abuses that would result from these patents, which would, in turn, have serious consequences for free competition and harm companies and consumers.


As indicated earlier, we firmly support the development of biotechnologies, and we believe that the development of GI-based industrial applications will create an unprecedented level of social wellbeing for humanity. We are convinced of the role that a healthy patent system plays in the development of biotechnology. We agree with the contents of the FTAA draft agreement in that the liberalization of international trade is a value at the service of other more important goods, thereby establishing a "Community of Values", among which we make special mention of the preeminence of the promotion of public health and access to medicines, the promotion of social and economic wellbeing of the members, the reciprocal benefit of producers and users of technology, and the balance of rights and obligations among members. In addition, we must emphasize that the transformation of the TRIPS patent system did not benefit the technology-importing countries.

Finally, in this regard, we reiterate that GI is inappropriable, but that industrial applications are appropriable. In this way, an incentive to develop and advance these applications is created, and the negative consequences resulting from the appropriation of pre-existing information in nature are avoided.

1 The current draft language talks of “sectors of vital importance.” That is, public interest could not be promoted in domestically significant sectors, but rather only in sectors of “vital” importance. We hope that the final language will be devoid of the adjective “vital”.

2 We refer here to the economic concept of a public good, which bears no resemblance to the legal notion of public goods.
3 For example, the enforcement of Section 301 of the Trade Act of the United States of America.

4 One of the most interesting discussions is on the patentability of the human genome.

5 Nobel Prize for Medicine 2002, researcher in biology and founder of the Sanger Institute, Cambridge, United Kingdom.

6 Article published in Le Monde, 22 December 2002.


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