Life Sciences Law

Problems and Current Discussion

Life sciences have given rise to some of the most important and innovative sectors of industry. Medicine, pharmaceutics and agriculture[1] show not only high innovation rates but also demand huge investments. Intellectual property (IP) law therefore plays a major role in these sectors. However, intellectual property law has to be seen in perspective with other areas of law as for instance regulatory and liability law as well as competition law and legal questions of personal rights and human dignity. Being highly innovative, the life sciences sector promises not only huge potential benefits to society but also entails inherent risks. Life sciences challenge the law not only to ensure innovations and distribute their potential benefits but also to cope with these risks. Traditionally, IP law fosters innovation and facilitates technology transfer whereas regulatory law limits or at least assesses and balances the risks of a specific technology and liability law allocates the remaining risks. However, this traditional distribution of functions has become blurred especially in the life sciences sector.[2]

Due to the rapid technological progress in life sciences the law is very often lagging behind. New innovations need a legal framework and various areas of the law are interlinked. Pharmaceuticals for example do not need a market authorisation which is regulated but also need to be reimbursed by the national social system to a certain extent.

Together with information technology and nanotechnology (material science) life sciences represent one of the technological areas with the highest innovation rate. Unlike some areas of information technology (e.g. software programming) in which innovative efforts can be distributed among a large heterarchical network of contributors (open source software), innovations in the life sciences sector typically require substantial investments and thus also exclusivity rights regarding the innovations. This underlines the importance of a viable life sciences industry and research.

Since the life sciences industry and research are heavily dependent on capital intensive innovations, it is not surprising that IP law, especially patent law, plays a major role for this industry. This is not only true for the pharmaceutical sector but also for medicinal products, plant protection and increasingly for seeds where the traditional plant breeders’ rights do not suit state-of-the-art trait development. However, the function of IP protection has to be seen in connection with the functions of other areas of law as for instance regulatory law and liability law. All of these functions constitute the legal framework for a specific technology.

Topics for Legal Research

Life Sciences Law fulfils four major functions, which can be illustrated referring to the innovation cycle: New technologies are constantly developed, diffused and applied. Accordingly, the law influences the creation, diffusion and application of new technologies. At each of these stages it strives to enhance public welfare. The resulting four major functions are fostering innovation, enabling technology transfer, controlling or at least balancing inherent risks of technology use and assigning responsibilities for resulting damages.

Fostering Innovation: IP Law

First, the law can intervene with the creation of new technologies, especially provide incentives for new innovations where market failures hinder the innovation process. This is the classical role of IP law. Traditionally, the most important function of patent law is to enable innovations where markets without legal rules would fail. Inventions are public goods which can be used by an unlimited number of persons at the same time, and whose use, once the invention is disclosed, cannot be prohibited by factual means (non-exclusivity). Legal exclusivity enables amortisation of research and development costs (subject to market success) and therefore encourages the creation of inventions. Legal exclusivity, however, excludes others from using the protected innovation and leads often to certain market dominance and raises questions on market behaviour which are addressed by competition law.

However, this classical function of patents has been revised and extended. For instance, the role of patents as an indicator for potential investors (especially when patents are held by start-up companies) is now widely accepted. Patents therefore ensure the funding for highly innovative companies. This also increases the average total number of inventions made during a specific period of time.

Another aspect of enabling innovations which is located at a later stage of the innovation cycle (“downstream”) is the commercialization function. Patents not only spur the creation of new inventions but also the further development of such inventions towards a marketable service or product. Especially in the area of life sciences it is one of the current matters of dispute at which stage of the innovation cycle patent protection should interfere in order to get the optimum overall efficiency. Patents on ideas are not admissible in order to prevent blocking effects for further inventions (especially in new areas of technology). Even further, it is debated whether optimum protection should be pushed to the developmental stage after the basic invention has been made.

Enabling Technology Transfer: IP, Contract and Competition Law

Second, the law plays a role in technology transfer either forcing parties to transfer technologies or, more important, creating a legal framework for the contractual exchange of new technologies. This is also a domain of IP law which creates markets for technology where the information paradox would otherwise hinder the exchange of information goods. IP law is complemented by contract law creating the legal framework for the material transfer of IP, for licenses or even for know-how contracts which do not rely on IP protection but only on the protection of trade secrets. A third important component of legal rules concerning technology transfer is competition law. By acting against restraints on competition it keeps technology markets open. In addition, competition law sets the legal framework for all markets in the life sciences sectors and aims to protect competition also in markets which are already established, such as insurers and hospitals.

Controlling Inherent Risks: Regulatory Law

Third, technology law encompasses regulatory law, intervening where a regulatory framework is needed to guarantee that a certain technology or area of technology is only used with an acceptable level of risk or where certain rights need to be balanced. One example is balancing the freedom of scientific research on the one hand and personal rights and questions regarding human dignity on the other hand in cases of human research. Classical examples are legislations concerning steam power, automobiles, nuclear energy, gene technology or novel food as well as the comprehensive regulatory framework on the market authorization for pharmaceutical products and medical devices as well as for crop protection products. Since these legislations try to hedge a specific risk, they necessarily look backwards and can only regulate specific areas of technology.

Regulatory law primarily aims at the safety and security of using technologies and also needs to balance different rights and interests. However, especially in the life sciences area it may also define legally binding boundaries of technology use which are ethically motivated. This can be due to the involvement of human beings (e.g. when using embryonic stem cells) or nonhuman beings (e.g. with animal testing).

Assigning Responsibilities: Liability Law

The fourth area of technology law is liability law allocating the remaining legally accepted risks and creating incentives for an optimal risk acceptance. This “column” is closely associated with the third (i.e. regulatory law) which defines the necessary diligence when using a certain technology and in some cases provides for strict liability rules. Therefore, general liability rules have to be taken into account together with more specific ones like product liability, liability rules for certain areas of technology or liability of the regulatory authority. Liability rules generally can be categorized according to the level of negligence they require. One of the main questions concerning strict liability rules is whether a certain rule allocates risks that were unforeseeable according to the state of science and technology at the time of the causal act (development risks) to the infringer, the technology user or the damaged party. From a regulatory law perspective public liability rules come into play. E.g. a public liability of authorities could arise if the market authorisation is illegal.

Goals of the Project within the Doctoral Program

Looking at the different areas of technology law from the perspective of innovation has the advantage of highlighting the connection between these areas which traditionally are regarded as separate legal disciplines. Moreover, it allows to draw parallels, for instance, to analyse IP law from a liability lawyer’s point of view. When technology law is about creating, distributing, using and bearing the consequences of innovations, the interaction between IP law, contract law, competition law, regulatory law and liability law becomes automatically the focus of juridical interest.

Especially in the life sciences area the use of specific technologies or the distribution of specific products like gene technology products, pharmaceutical products, medicinal products or seeds and crop protection products is often tightly regulated by legal provisions. Although the main function of such provisions is to control the risks of potentially dangerous technologies and to balance interests, they have assumed a secondary function of preventing potential market failures in the development and the production of such technological products. In this regard competition law again plays in important role since one task of competition rules is to correct market failures and to allow effective competition.

The project aims at highlighting important examples of coevolution between the life sciences and the law. It is also of high interest to other disciplines in the life sciences research or the life sciences industries as well as to other institutions of the life sciences sector such as hospitals, insurers and public health authorities. Cooperations with the seed industry and the pharmaceutical industry already exist. Existing cooperations with the universities of Freiburg (i.Br.), Berlin (Humboldt) London (Queen Mary) and the European University Institute in Florence shall be improved by the program. New university cooperations are planned, e.g. with the University of Berne regarding stem cells, with the New York University, School of Law as well as with the Canada Health Law Institute of the University of Alberta.

[1] The agricultural sector comprises seeds and crop protection including biotechnological-based approaches such as plant breeding and genetic modification.

[2] Zech, Life Sciences and Intellectual Property: Technology Law Put to the Test, 7 ZGE /IPJ 1 (2015).