The California Supreme Court yesterday ruled that individuals have the right to be informed and possibly remunerated if tissues taken from their bodies are transformed through genetic engineering into commercial products.

But the court rejected a lower court's ruling that bodily material remains the property of the person from whom it was taken when it is manipulated in a laboratory.

The long awaited decision marks the first time a high court in the U.S. has addressed the issues raised by the increasingly common practice of using human tissue as the basis for new drugs and tests. The case involved a suit brought by a Seattle man whose doctor used his blood cells to create a potentially lucrative bioengineered drug.

"Up until now the law only required that a physician tell a patient things that were in the patient's own medical interest," said Sanford Gage, the attorney for the plantiff. "This says that the physician must also disclose his financial interest. {A doctor} can't make a secret profit in his relationship with a patient."

But while saying that patients have the right to refuse the use of their body parts, the court stopped short of saying that an individual has a property right to that material -- a concept which some scientists had feared could hopelessly complicate medical research and open researchers to lawsuits.

"Researchers around the U.S. are heaving a sign of relief," said Arthur Caplan, director of the Center for Biomedical Ethics at the University of Minnesota. "Had the property issue been upheld, it would have thrown the entire field of biotechnology and applied human biology into upheaval . . . But from the point of view of science policy, this still has serious implications. Researchers must disclose their purposes and intentions. Right now there are many research centers that are not up to snuff in letting people know what they do."

The case arises from an operation 14 years ago at the University of California at Los Angeles Medical Center to remove the cancerous spleen of 45-year-old John Moore.

The procedure was routine. But after the operation, Moore's doctor, David Golde, discovered that his blood cells had certain unique properties that, if altered through genetic engineering, could be potentially useful as the basis for a therapy for cancer. According to Moore's lawyers, Golde eventually sold the rights to a cell line developed from the blood for $3 million to a biotechnology company, which is studying it as a potential treatment for AIDS, cancer and in speeding the recovery of bone marrow transplant patients.

The fact that Golde used human cells as the basis for his research is not unusual. Laboratories can now grow, cultivate and improve some properties of human cells by modifying their DNA, the genetic information that governs the functioning of all living cells. Using samples taken from donated tissue has become a commonplace -- and essential -- part of biomedical research.

In fact, every one of the fruits of biotechnology -- which is based on the principle of using altered forms of the body's proteins and chemicals as drugs -- has been based on genetic information taken from a single person.

But in a lawsuit filed in 1984, Moore argued he should have been informed of the fact that some portion of his tissues had been used to create a commercial product and, further, that he had a right to some portion of the money paid for the products based on his cells.

In its decision, the California court agreed with Moore only in part. He should have been informed, the court said, to enable him to negotiate possible payment, but once the cells from his diseased spleen left his body, he ceased to own them.

By declining to extend the right of ownership, the court remained consistent with the broad tradition of Western law, which has held that individuals have no right to profit from the sale or commercial use of their body parts.

"Had they gone the other way, it would really have been bizarre," Caplan said. "It would have opened the door to questions like, 'Can I sell my kidneys? Can I sell my blood?' "