If successful the company stands to make millions, but it has raised worries over the ethics of patenting life itself.
In the most famous animal patent so far - the Oncomouse, developed by Harvard University - genetic engineers gave the creature extra genes that make it susceptible to cancer, creating a vital research tool. They have claimed a patent on the animal itself, which has been granted in the United States and in Europe but remains the subject of appeals by a broad cross-section of objectors.
AGC is claiming rights over its novel 'use' of the 3mm-long nematode worm, Phasmarhabditis sp, rather than ownership of the creature itself. Sue Mayer, director of science at Greenpeace, said: 'If you were to take this to extremes, farmers could claim patents on crop rotation as a way of protecting against pests. It's one thing to talk about biological control. This seems to be about putting a charge on nature.'
Scientists have recently discovered that Phasmarhabditis sp, which lives alongside the slug, is a parasite which, in sufficient numbers, will infest and kill it. Slugs damage winter wheat, so the worm could prove an important agricultural weapon. AGC hopes to produce its first commercial product, for use on garden slugs, next spring.
The treatment - containing the worms in a clay-based spray - will replace chemical molluscicides, so is likely to be welcomed as environmentally benign. Most chemical treatments kill animals that benefit the soil, such as earthworms. AGC's treatment will kill only slugs.
The company found that the worm lives in association with a number of bacteria, only one of which is critical in infesting slugs. Working with scientists at Bristol University's Long Ashton research station, AGC identified the key bacterium and developed a way to mass-produce a 'pure' combination of worm and only the key bacterium.
The company applied for a patent in 1991. The application was published in January this year but has yet to be granted. It is deliberately broad, seeking ownership of the use of the worm for 'the control of agricultural, horticultural or human and animal health pests'. If it is approved the company will get monopoly rights over specific uses.
Paul Rodgers, AGC's research and development manager, is confident it will get approval. He conceded that the potential for human health applications was limited.
Dr Rodgers said companies would not invest in developing technology if they felt they would not get a good return. 'You can superimpose a wider debate on top of that about whether life should be patented, and I can understand worries about higher forms of life. But with nematode worms and other lower life-forms I don't see that this really presents any moral question. We have simply adapted the discovery to turn it into a piece of technology that is commercially useful.'
But critics question whether any individual or organisation can claim to own something that exists naturally. 'They are trying to exploit something that occurs in nature,' Dr Mayer of Greenpeace said. 'It all hinges on the degree of human intervention involved.'
The company will have to convince patent attorneys that it is doing more than asking for rights over what is 'an essentially biological process', she said. Under existing law this cannot be patented.