The Supreme Court yesterday ruled that life forms created in the laboratory by genetic engineering may be patented like any other invention.

The 5-to-4 decision, which critics fear will prematurely unleash this relatively unexplored technology, could make genetic engineering more profitable for scientists and corporations by giving them potentially exclusive commercial rights for any marketable life forms they produce.

The case -- one of the most controversial of the past decade -- was brought by the General Electric Co. after it was denied a patent for a new microorganism created to clean up oil spills.

The U.S. Patent Office rejected GE's application. "Products of nature," it said, were not meant by Congress to be the exclusive property of anyone. Living things, like the leaves of trees, and laws of nature, like Einstein's theory of relativity, did not fit U.S. patent law, the office said.

Chief Justice Warren Burger, writing for the court, rejected the idea that the products of genetic engineering are legally products of nature.

They would not exist but for the intervention of the scientists who created them in the lab, he wrote. Like the telephone, the electric lamp and the airplane, these organisms are man-made and are protected by laws designed to cover man's inventions.

The decision does not affect other federal controls in place on genetic research or the power of the Environmental Protection Agency to control the release of new microorganisms into the environment.

The court's ruling turned exclusively on an interpretation of the patent law: Are combinations of genes considered to be "manufactures" that the law says can be patented?

The arguments in the case, however, turned it into a forum on the social benefits or hazards of genetic engineering.

Industry argued that the potential benefits -- new medicines and technologies -- justified a stimulation of research by making it more profitable.

The People Business Commission, a consumer lobby in Washington, invoked visions of an "Andromeda Strain" and contaminated gene pools. Experimentation, stimulated by a favorable ruling, could lead to "dangers of an irreversible nature . . . Once out of the laboratory, there is no recalling a life form," the commission told the court.

Burger said it was not the court's business to thrash out the broader questions raised by critics of genetic engineering: the dangers of new organisms escaping control and creating new environmental hazards, the possibility of a future patent application for a life form (like animals); the matter of controls on genetic engineering.

The opponents, Burger wrote, "present a gruesome parade of horribles . . . We are without competence to entertain these arguments -- either to brush them aside as fantasies generated by fear of the unknown, or to act on them. The choice . . . is a matter of high policy for resolution within the legislative process after the kind of investigation, examination and study that legislative bodies can provide and courts cannot."

Genetic engineering is the manipulation of genes, which transmit heredity in cells, to create new organisms. The new life forms may have characteristics and functions never before produced by man. Scientists have already claimed results in producing hormones to treat illnesses such as diabetes and dwarfism and are working with genetic engineering to make interferon, which they hope can combat cancer.

Large corporations, such as General Electric and Standard Oil, have been joined by an entirely new array of companies with names like Genentech, Genex and Biogen in the experimentation.

In 1972 microbiologist Ananda M. Chakrabarty isolated four strains of bacteria in the environment, each of whic could break down a separate component of oil.

Mindful of the increasing number of polluting oil spills, Chakrabarty experimented with each strain and found that individually, none was effective in breaking down all the pollutants of petroleum. Mixed together in their existing form, the four strains destroyed each other.

So the scientist took genes from each of the strains and induced them to combine sexually in the laboratory.

The result, which General Electric ultimately acquired, was a new organism called Pseudonoma Originosa, believed capable of breaking down all the parts of the oil and thus useful in cleaning up oil spills.

The process used by Chakrabarty fell somewhere between recombinant DNA techniques and the hybridization of plants, according to scientists.

The government, opposing the issuance of the patent, argued that Congress enacted a separate patent law to cover plant hybridization because it involved a life form. That was Congress' signal, the government's lawyer argued, that such unusual inventions should be handled under new laws and not the old patent law.

Burger disagreed. The fundamental patent law was developed by Thomas Jefferson and the Congress precisely because inventions are "often unforeseeable," and are to be encouraged, he said.

Joining Burger were Justices Potter Stewart, Harry Blackmum, William Rehnquist and John Paul Stevens. Justice William Brennan wrote a dissent with Justices Byron White, Thurgood, Marshall and Lewis Powell.

The dissenters disputed Burger's interpretation of the patent law, saying Congress never intended to cover living organisms.

"It is the role of Congress, not this court, to broaden or narrow the reach of the patent laws," Brennan said. "This is especially true where, as here, the composition sought to be patented uniquely implicates matters of pulbic concern."