Patent law addresses a problem that is basically ethical: what is a fair balance between the interests of the inventor, the industry, potential users and society at large?
As I have argued elsewhere in some detail , ethical issues enter into patenting controversies in three ways: first, in the interpretation of conditions for patentability, second, in the interpretation of the famous clause on ordre publique and morality of the European Patent Convention EPC 53 (a) and the 1998 EU Directive on the Legal Protection of Biotechnological Inventions Directive (98/44/EC), and last on how the patent holder may use the patent rights granted.
What are the rules of patentability?
Article 6 of the Biotech directive 98/44/EC prohibits ”uses of human embryos for industrial and commercial purposes”. … But no definition of 'embryo' is provided. As is well known, also to the European Court of Justice, there are different definitions of this concept in European legislations, reflecting different ethical views. The choice of a definition is not ethically neutral; it makes, given the existing framework, certain options possible and prohibits others. Sometimes the most inclusive or restrictive definition of 'embyo' is argued for with reference to the intentions of the legislator. But the legislator could not have intended anything concerning the present situation in stem cell research; when the directive was drafted, current developments in genetics, epigenetics and stem cell research did not exist.
"it is hard to see why the definitions of the member states with the most restrictive legislation... should be binding for the other member states"
From an ethical point of view, it is hard to see why the definitions of the member states with the most restrictive legislation, such as Italy and Germany, should be binding for the other member states. It is an illusion to believe that controversies over these definitions can be settled in a way that does not have implications for values and ranking orders of values. It makes little difference if these definitions are masquerading as legal definitions. The Advocate General of the European Court of Justice is also mistaken, when he suggests that if the use of embryonic stem cell lines increases, the need for more embryos will increase proportionally; stem cell lines can multiply and continue to expand indefinitely.
The morality clause
According to the morality clause EPC article 53 (a), Euroean patents will not be granted for innovations, the exploitation of which are contrary to ordre public or morality. But the Biotech directive and the EPC give little guidance as to how ’ordre public and morality’ is to be interpreted. This is regrettable, since moral views differ in the EU. However, the Biotech directive states in article 5(2) that an element isolated from the human body or otherwise produced by means of a technical process can be patented, provided that the regular patentability requirements are met, even if the structure of that element is identical to that of a natural product.
According to article 7 of the 1998 Directive 98/44/EC: ”The European Group on Ethics evaluates all ethical aspects of biotechnology ”. Article 5(2) of the Patent directive was indeed one of the starting points for the European Group on Ethics in its Opinion 16 where questions raised by controversies over patents of biotechnological products were discussed from an ethical point of view . The group wrote:
”The Group considers that patenting of inventions allowing the transformation of unmodified stem cells from human embryonic origin into genetically modified stem cell lines or specific differentiated stem cell lines for specific therapeutic or other uses, is ethically acceptable, as long as the inventions fulfil the criteria of patentability, and in respect of the above-mentioned ethical principles.”
Consequences of a ban on patents
If patents are a necessary incentive for investments, and the EPO refuses to grant patents on methods or products based on research in human embryonic stem cells but such patents are granted elsewhere, developments in regenerative medicine on the basis of progress in research in human embryonic stem cells will take place outside of Europe.
"European researchers may find themselves at a competitive disadvantage"
Thus European researchers may find themselves at a competitive disadvantage: patents for inventions based on SC research are granted elsewhere but not in Europe. This also means that European taxpayers and patients may be at a disadvantage, since inventions based on work by European researchers may be marketed to European hospitals and patients, if patented outside Europe. The revenue will then not go to European research centers, pharmaceutical companies and researchers. Is this in the best interests of European citizens?
It should also be remembered that in the recitals of the biotech directive, member states are obliged to provide that their national laws do not preclude the patentability of elements isolated from the human body, in order to encourage research aimed at obtaining and isolating such elements valuable to medicinal production.
Lincoln Tsang  has summarized the situation as follows:
”There is an urgent need to consider how such products [based on stem cells] should be optimally and appropriately regulated in the interest of public health protection without causing unnecessary hindrance to patients wishing to access innovative treatments. In order to achieve this, it is imperative for the regulatory authorities to work in partnership with the wider scientific community as well as the patient groups.”
European Advocate General critical of stem cell patents - news item on Advocate General's recommendation (10 March 2011)
Stem cell patent case could have wide-ranging impact on European research - open letter from 13 senior scientists
Embryonic stem cell research: an ethical dilemma - Factsheet outlining the ethical arguments around embryonic stem cell research
Conversations: ethics, science, stem cells - 19-minute video exploring the ethical issues involved in stem cell research
 Hermerén, G. Patenting of Human Stem Cell-Based Inventions: Ethical Issues Including and Beyond the Morality Clause. In: Hug K, Hermerén G (eds), Translational Stem Cell Research. New York: Springer, 2010, pp. 323- 338.
 European Group on Ethics, Ethical aspects of patenting inventions involving human stem cells. Brussels: European Commission, May 7, 2002.