What DNA, Patents and Lady Gaga have in common

(Fortune) -- When radio was invented in the late nineteenth century by the likes of Marconi, Edison, and Tesla, government and industry faced a conundrum. Who would own the limited band of electromagnetic frequencies that made this new invention possible?

By the 1920s the decision was made that the public would own the airwaves, with the government leasing frequencies to companies that were required to follow certain rules. A century later this system isn't perfect, but it does bring us every day everything from text messages to Youtube, to the latest hits from Lady Gaga.

Society now faces a similar ownership predicament with who owns human genes -- another kind of spectrum that always existed, but was unsuspected until we discovered it. This time, however, the story is different. Instead of a public ownership model granting licenses, the U.S. Patent Office has spent the last twenty years awarding patents to companies, universities and others who discover genes -- with over 20% of human genes already claimed.

Controversial for decades, the validity of issuing these patents has erupted again in a case brought last year by the American Civil Liberties Union against Myriad Genetics (MYGN), which holds patents on two genes that in a mutated form can cause a person to be high risk for breast cancer. According to the ACLU and a long list of plaintiffs that includes research and patient advocacy groups, the U.S. Patent Office (also listed as a defendant) was wrong to issue these patents -- and by extension all genetic patents.

"Genes are naturally occurring entities, like air or gravity," says ACLU attorney Chris Hansen, "and therefore under the law they are ineligible for patenting."

The ACLU also claims that Myriad's patents block access to the genes by researchers and patients who want a second opinion on breast cancer results, but are barred by the exclusivity of the Myriad patent. They criticize Myriad's access prices, which can range as high as $3,000.

Myriad General Counsel Richard Marsh counters that Myriad and researchers working at the University of Utah -- which co-own the patents, and are co-defendants in the suit -- did discover something that exists outside of nature. By extracting the genes from the human body, the company claimed, and the U.S. Patent Office agreed, that it had created an isolated sequence that is patentable, whereas the sequence as it occurs inside a person is not -- a contention being directly challenged by ACLU.

Marsh also insists that researchers and patients have benefited from Myriad patenting the BRCA I and BRCA II genes and certain mutations within these genes that are linked to breast and ovarian cancer. He also defended the company's pricing, saying that it is the essence of patent protection -- that Myriad can charge what it likes on something it has created, until the patent lapses and the gene enters the public domain.

More critically, Myriad and others in the pharmaceutical industry claim that without patent protections, no one would invest in developing products based on genetic markers for disease. "Without patents, who is going to do the work and spend the money to make this product accessible to people?" asks Marsh.

Both sides are now waiting for federal Judge Robert Sweet to rule on whether or not the case will go to trial in the U.S. District Court of the Southern District of New York. Last month Sweet refused to dismiss the case in a motion filed by Myriad, suggesting that he may want to hear the case, although no one knows for sure.

"If not now, it will have to be dealt with later, because there are core issues at stake that impact the entire pharmaceutical industry," says Robert Cook-Deegan, Director of the Center for Genome Ethics, Law & Policy at Duke University.

Which brings us back to the invention of the radio and the electromagnetic spectrum -- and potential solutions that demand some imagination and creativity beyond the tried and true pharma track of slapping patents on everything in sight.

One idea would be to turn genetic discoveries -- many of which are initially found using taxpayer funds -- into publicly owned entities that could be licensed to companies like frequencies on the radio dial. Licensees would be required to follow certain rules such as allowing researchers and patients access to DNA sequences, and requiring that pricing be in line with costs.

A variation of this model has been used for decades to govern the extraction of natural resources such as oil and gold from public lands. Businesses bid on and receive licenses that allow them to extract these resources (and to earn back investments) for a period of time if they follow certain rules.

Yet another idea comes from a 2004 global agricultural pact -- The International Treaty on Plant Genetic Resources for Food and Agriculture -- ratified by the United States and other nations that allows patent holders to own a genetic discovery for modifying plants, but not to block others from licensing and using it. Last month, an advisory committee at the Department of Health and Human services issued recommendations that patents on genetic diagnostic tests also be modified to allow greater access by researchers and patients.

Ultimately, the tussle over who owns genes may be decided not by government agencies, lawyers, or judges, but by advancements in science. Already the notion that one gene marker can best determine a person's risk for a common disease is becoming outmoded. The latest science suggests that risk factors for maladies such as diabetes are increased by the interaction of dozens -- or even hundreds -- of genes and other molecular structures in the body. A legal system that does not retain flexibility in incorporating this rapidly moving science will cause confusion down the line.

Finding clarity in the issue of who owns our DNA will take time, and will be far more complex than, say, a simple frequency on a radio carrying a song by Lady Gaga. Yet it's crucial in this new age of genomics and molecular biology that we are as clever about how we implement new discoveries as the discoveries themselves.