CHAPTER 2
BACKGROUND
Australia's patent system
2.1
In Australia, the patent system is governed by the Patents Act. Patents
are granted by a statutory officer, the Commissioner of Patents, and IP
Australia is the government agency with responsibility for administering the
patent system. A patent is a private property right granted by the Crown to the
inventor of a product, method or process in a field of technology. A patent
grants exclusive rights to the patent holder, allowing them to prevent others
from exploiting the invention without a licence and to maximise the commercial
potential of the invention.
2.2
Most granted patents are standard patents which offer a period of patent
protection to inventions for 20 years. Innovation patents, which were
introduced in 2001, offer protection to inventions which do not meet the
inventive threshold required for standard patents and, correspondingly, have a
more limited period of protection (eight years).
2.3
The patent system seeks to encourage the availability of new and useful
technologies to society through the incentive of a monopoly to commercially
exploit an invention for a given period. The patent system also promotes
innovation through encouraging the diffusion of knowledge, as it is a condition
of the grant of a patent that the inventor publicly discloses details of their
invention.[1]
2.4
The Patents Act contains a number of requirements for the patentability
of an invention. In particular, an invention will be patentable if:
-
it is a 'manner of manufacture';
- it is novel and involves an inventive step (as judged against previous
knowledge and practice, also known as the 'prior art');
- it is useful;
-
the details of the invention are sufficiently well disclosed or
described; and
- it is not the subject of one of the specific exclusions.[2]
2.5
The 'manner of manufacture' requirement and the specific exclusions are
of particular relevance to the Bill.
Manner of manufacture and specific
exclusions
2.6
The Patents Act requires a patentable invention to be a 'manner of
manufacture within the meaning of section 6 of the Statute of Monopolies'.[3]
The English Statute of Monopolies of 1623 is the historical predecessor of
Australian patent law, including the current Patents Act. The original purpose
of the Statute was to abolish monopolies which had been granted by the Crown on
trades and industries. However, section 6 of the Statute made an exception
for new inventions. Section 6 provided for a term of exclusive exploitation
rights 'to the true and first inventor' who introduced 'any manner of new
manufacture' to the jurisdiction, provided it met certain conditions.[4]
As the Explanatory Memorandum (EM) to the current Bill notes:
Section 6 of the Statute of Monopolies, being one of the
express exceptions, provided that 'manners of new manufacture' could be the
subject of 'Letters Patent and Grants of Privilege' provided they were 'not
contrary to the Law, nor mischievous to the State, by raising Prices of
Commodities at home, or Hurt of Trade, or generally inconvenient'.[5]
2.7
The basis of the current legal conception of the term 'manner of
manufacture' was established by the High Court of Australia in the case of National
Research Development Corporation v The Commissioner of Patents (NRDC case).[6]
In that case, the court endorsed a more expansive definition of 'manner of
manufacture', whereby patentability is determined by reference to the policy
intent of the Patents Act rather than by application of a strict definition.
The Court stated:
The right question is: "Is this a proper subject of
letters patent according to the principles which have been developed for the
application of s. 6 of the Statute of Monopolies?"[7]
2.8
An invention will meet this requirement if it is an 'artificially
created state of affairs' which belongs to the 'useful arts' rather than 'fine
arts', and it must provide a material advantage in a field of economic
endeavour. Judicial interpretation has also recognised a number of categories
of subject matter that fail to satisfy the requirement. These include mere
discoveries, ideas, scientific theories and laws of nature.[8]
2.9
The Patents Act also provides that 'human beings, and the biological
processes for their generation, are not patentable inventions'.[9]
For the purposes of an innovation patent, another exception to patentability
exists for plants and animals, and the biological processes for the generation
of plants and animals (but this does not apply if the invention is a
microbiological process or a product of such a process).[10]
2.10
Judicial and academic commentary indicates that the absence of further express
statutory exclusions in the Patents Act has been influential in the willingness
of courts to accept a broad range of subject matter as a 'manner of
manufacture'.[11]
The mainstream view has been that the NRDC case, and the lack of other express
exclusions on patentability in the Patents Act, have had an expansive effect on
the limits of patentable subject-matter in Australia:
The lack of express statutory exceptions combined with the breadth
of the NRDC judgment has enabled courts to remove the fetters that may
otherwise prevent new developments from being patentable. The result has been a
piecemeal erosion of formerly perceived classes of excluded subject matter.
NRDC itself rejected the former exclusion of patents for horticultural and
agricultural methods. Subsequent decisions declared patents valid for computer
programs and methods of medical treatment for humans with the result that a
number of formerly excluded classes of subject matter are now regarded as
patentable. Patents are granted for computer programs, computer implemented
systems used in business, living plants, animals, genetic materials and
recombinant DNA techniques.[12]
Generally inconvenient
2.11
The Statute of Monopolies provides that a patent may not be granted on
the grounds that a new manner of manufacture is 'contrary to law' or otherwise
'generally inconvenient'. However, under Australian law it is currently unclear
whether inventions can be excluded from patenting on public policy grounds,
such as for being 'generally inconvenient'.[13]
Limitations on granted patents
2.12
Under the Patents Act, the grant of a patent by the Commissioner of
Patents does not guarantee or necessarily imply that the patent is legally
valid. There are four opportunities for the validity of a patent to be tested
under the Patents Act:
- each application is examined by IP Australia before it may be
accepted or refused (examination);
- each accepted application may be opposed before grant by any
party, including the Minister (opposition);
- applications may be re-examined before grant at the discretion of
the Commissioner of Patents, and a patent must be re-examined after grant on
request from any person in an approved form, including the Minister (re‑examination);
and
- post-grant, the validity of a granted patent can be challenged in
the courts by any party, including the Minister (revocation).[14]
2.13
In practice, the grant of a patent does not give an absolute right to
exploit an invention in any way the inventor chooses. A patent holder may still
need to satisfy regulatory or legal requirements in order to exploit a patented
product or process.
2.14
The Patents Act also contains certain safeguards which allow patent
rights to be altered in some circumstances. For example, the Crown Use
provisions of the Patent Act (sections 163-170) permit certain government entities
to use, and to authorise others to use, patented inventions without the
permission of the patent owner in certain circumstances. Such use is only
permissible where the use is for the proper provision of services of the
Commonwealth, or of a state, or a territory. The relevant government must give
the patent owner remuneration for the use of their patent.[15]
2.15
The compulsory licensing provisions of the Patents Act (sections
133-140) provide that a compulsory licence can be sought where the patent
holder fails to meet the reasonable requirements of the public. These
provisions set out the circumstances where, for the purposes of granting a
compulsory licence, the reasonable requirements of the public with respect to a
patented invention are taken not to have been satisfied.[16]
2.16
These circumstances include where an existing trade or industry in
Australia, or the establishment of a new trade or industry, is unfairly
prejudiced, or the demand in Australia for the patented product, or for a
product resulting from the patented process, is not reasonably met because of
the patentee's failure to:
- manufacture the patented product to an adequate extent and supply
it on reasonable terms; or
- grant licences on reasonable terms.[17]
International treaties
2.17
Australia is party to a number of multilateral and bilateral treaties
which relate to the patent system, reflecting efforts to harmonise
international intellectual property rules. Further details of two of these
treaties, the Agreement on Trade-Related Aspects of Intellectual Property
Rights and the Australia-United States Free Trade Agreement, are outlined
below.
Agreement on Trade-Related Aspects
of Intellectual Property Rights 1994
2.18
The Agreement on Trade-Related Aspects of Intellectual Property Rights
1994 (TRIPS Agreement) established, among other things, the minimum standard of
patent protection that each member of the World Trade Organisation (WTO) must
provide under its national laws. In particular, Article 27(1) of the TRIPS
Agreement requires member countries, such as Australia, to make patents
available to all fields of technology, provided that they are new, involve an
inventive step and are capable of industrial application.
2.19
Article 27(2) provides exceptions for the patentability of inventions
'the commercial exploitation of which is necessary to protect ordre public
or morality, including to protect human, animal or plant life or health or to
avoid serious prejudice to the environment'. Article 27(3) provides that
members may also exclude from patentability 'diagnostic, therapeutic and
surgical methods for the treatment of humans and animals', as well as 'plants
and animals other than micro-organisms'.
Australia-United States Free Trade
Agreement
2.20
The Australia-United States Free Trade Agreement (AUSFTA) entered into
force on 18 May 2004 and contains a number of provisions relating to the patent
system. According to Article 17.9 of the AUSFTA:
1. Each Party shall make patents available for any invention,
whether product or process, in all fields of technology, provided that the
invention is new, involves an inventive step, and is capable of industrial
application. The Parties confirm that patents shall be available for any uses
or methods of using a known product.
2. Each Party may only exclude from patentability:
(a) inventions, the prevention within their territory of the
commercial exploitation of which is necessary to protect ordre public or
morality, including to protect human, animal, or plant life or health or to
avoid serious prejudice to the environment, provided that such exclusion is not
made merely because the exploitation is prohibited by law; and
(b) diagnostic, therapeutic, and surgical methods for the
treatment of humans and animals.
BRCA gene patents
2.21
The Senate Community Affairs References Committee gene patents inquiry
was initiated in response to concerns arising from attempts in 2002-03 and 2008
by Genetic Technologies Ltd (Genetic Technologies), a genetic testing company,
to enforce its patent rights over the BRCA1 and BRCA2 genes (BRCA gene patents)
in Australia. The BRCA gene patents relate to methods and materials used to
isolate and detect mutations in two genes which may indicate a predisposition
to certain cancers, particularly ovarian and breast cancer. Myriad Genetics Ltd
(Myriad), a company based in the United States, granted Genetic Technologies
exclusive rights to BRCA gene testing in Australia.
2.22
In 2002-03 and 2008, Genetic Technologies sent 'cease and desist'
letters to public laboratories, research bodies and other entities seeking to prevent
these organisations from engaging in any further testing for the BRCA genes.
However, in both cases, Genetic Technologies ultimately dropped legal demands
in relation to testing for the BRCA genes. In a report to shareholders on 9
July 2003, Genetics Technologies stated that it was not seeking to enforce its
rights over the genes and stated that the BRCA genes 'are our gift to the
Australian people'.[18]
Similarly, following its attempt to enforce its patent rights in 2008, Genetic
Technologies announced that it had reviewed its decision and 'resolved to
immediately revert to its original decision to allow other laboratories in
Australia to freely perform BRCA testing'.[19]
2.23
The Senate Community Affairs References Committee indicated that its
understanding was that, in relation to the 2008 demands, state health
departments had negotiated with Genetic Technologies following the issuing of
the 'cease and desist' letters.[20]
A number of reasons were suggested for Genetic Technologies' change of position
in relation to the BRCA patents. These included: public and professional
criticism of the decision to enforce the patents; the previous purported 'gift'
of the BRCA genes to the Australian people would have created difficulties for
enforcement; negotiations with state health departments may have indicated that
the demands or the patents could be legally contested; and the Australian
Competition and Consumer Commission was considering, or had instituted an
investigation into, whether enforcement of the BRCA gene patents raised issues
of anti-competitive behaviour.[21]
Public reviews
2.24
The introduction of the Bill follows a number of public inquiries and
reviews of the law relating to gene patents and their potential impacts.
Australian Law Reform Commission –
Genes and Ingenuity (ALRC Report)
2.25
On 29 June 2004, the ALRC presented its extensive report on gene
patenting and human health, which included 50 recommendations. While outlining
a number of its concerns relating to gene patents, the ALRC concluded that
inventions involving genetic materials and technologies should be assessed
according to the same legislative criteria as other inventions:
In the ALRC's view, concerns about the patenting of
inventions involving genetic materials and technologies should not be addressed
by the introduction of legislative requirements that would relate only to the
patentability of this type of invention. Such an approach may set an
undesirable precedent for the way in which the patent system should accommodate
new technologies in the future. The current requirements for patentability are
technology-neutral and are able to adapt to new technologies as they arise.
Introducing specific rules for inventions involving genetic materials and
technologies may suggest that special requirements for patentability should be
implemented for future technologies that raise a different set of issues. Such an
approach would unnecessarily fragment and complicate Australian patent law.[22]
Senate Community Affairs References
Committee – Gene Patents
2.26
The Senate Community Affairs References Committee's report made 16 recommendations
regarding gene patents, genetic testing and the patent system. Several of these
recommendations supported or restated the recommendations in the ALRC Report.
However, the Senate Community Affairs References Committee determined that 'it
would not recommend at this stage the Patents Act 1990 be amended to
include an express prohibition on human genes and genetic products'. It
concluded that 'there would need to be a very clear case and significant social
and political consensus on the need for such a change' as the 'evidence to the
inquiry shows there are legitimate and sometimes finely balanced arguments on
both sides of the debate'.[23]
The committee's decision not to recommend an express prohibition on gene
patents was based on recent international and national legal developments
relating to the patentability of genes, and the announcement of the current
Bill 'which contains an express prohibition in specific terms'.[24]
2.27
The Senate Community Affairs References Committee stated:
While the Committee would support an amendment to the Act to
ensure that isolated genetic materials are not classed as an invention and
therefore patentable, the Committee acknowledges that there are many issues
which require further investigation in relation to the Bill, such as the likely
impacts, effectiveness and scope of an express prohibition relating to
'biological materials' as is proposed...The Committee believes that the
introduction of the Bill to the Senate will provide a further, and much-needed,
opportunity for the arguments and questions around the impacts and
effectiveness of an express prohibition on gene patents to be considered.[25]
2.28
In its comments, the Senate Community Affairs References Committee also noted
'the strong consensus among opponents of an express prohibition on gene patents
that the concerns which formed the basis of the Committee's inquiry can be more
effectively addressed through a range of responses directed not at gene patents
per se but at improving the operation of the patent system more generally'.[26]
Advisory Council of Intellectual
Property – Review of Patentable Subject Matter (ACIP Report)
2.29
The Advisory Council on Intellectual Property (ACIP) is an independent
body appointed by the Australian Government. ACIP advises the Minister for
Innovation, Industry, Science and Research on intellectual property matters and
the strategic administration of IP Australia. Adopting one of the
recommendations made in the ALRC Report, the Minister, Senator the Hon Kim
Carr, requested that ACIP conduct a review of patentable subject matter. The
review included the appropriateness and adequacy of the 'manner of manufacture'
test as the threshold requirement for patentable subject matter under
Australian law, and the historical requirement that an invention must not be
'generally inconvenient'. Following wide consultation, ACIP provided its final
report on the review of patentable subject matter (ACIP Report) to the Minister
in December 2010 and the final report was publicly released on
6 February 2011.[27]
2.30
The ACIP Report made 11 recommendations, including several
recommendations for amendments to the Patents Act, namely:
- a recommendation to define patentable subject matter 'using clear
and contemporary language' that embodies the principles of inherent
patentability as developed in the case law of Australian courts;
- a recommendation that the specific exclusions which currently
exist in the Patents Act should be maintained, but other specific exclusions,
including 'to prevent the patenting of human genes and genetic products' should
not be introduced; and
- a recommendation that a general exclusion on ethical grounds
should be added to the Patents Act, as permitted under Australia's
international obligations, 'to exclude from patentability an invention the
commercial exploitation of which would be wholly offensive to the ordinary
reasonable and fully informed member of the Australian public'.[28]
IP Australia – public consultation
and proposed legislation
2.31
In 2009, IP Australia released several consultation papers, and sought
submissions from interested parties, as part of a proposed broad package of
intellectual property reforms.[29]
On 3 March 2011, IP Australia released a public exposure draft of the
Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Raising the
Bar Bill), and an associated explanatory memorandum, and sought submissions
from interested stakeholders. On 22 June 2011, the Raising the Bar
Bill was introduced into the Senate.[30]
2.32
As currently drafted, the Raising the Bar Bill will amend a number of
pieces of intellectual property legislation including the Patents Act. The
amendments to the Patents Act incorporate changes intended to raise the quality
of granted patents, and allow free access to patented inventions for research
and regulatory activities. In particular, the Raising the Bar Bill will:
- amend the Patents Act to remove restrictions on the information
and background knowledge taken into account when assessing whether an
application is sufficiently inventive to justify a patent;
- strengthen the requirements that a patented invention be useful:
that is, that the invention works in the way that the patent says it does and
that the specification explains how the invention works;
- raise the standards set for disclosure of an invention, to ensure
that granted patents are no broader than the invention which has been disclosed;
- increase certainty in the validity of granted patents by expanding
the grounds which the Commissioner of Patents can consider; and applying a
consistent standard of proof across all grounds, so that the Commissioner is
not obliged to grant patents which would not pass scrutiny in a court challenge.[31]
2.33
In relation to access to patented inventions for research and regulatory
activities, the Raising the Bar Bill will amend the Patents Act 'to draw a line
between research and commercial activities, leaving researchers free to conduct
their experiments without worrying about the patent system'. The amendments
clarify that research and experimental activities relating to patented
inventions are exempt from infringement, whereas commercial activities are not.
The Raising the Bar Bill will also introduce an exemption for 'activities
undertaken solely for the purpose of gaining regulatory approval to market or
manufacture a patented technology'.[32]
Legal cases
2.34
Legal cases in the United States and Australia regarding the
patentability of genes and genetic material are also relevant in providing
background and context to the current Bill.
United States
2.35
On 29 March 2010, a legal challenge to the validity of the
BRCA gene patents was decided in the US District Court for the Southern
District of New York: The Association of Molecular Pathology and Others v
The United States Trademark Office and Myriad Genetics, Inc and Others (Myriad
case). Judge Robert Sweet found in favour of the parties challenging the US
Patent and Trademark Office's (USPTO) approach to granting patents over genetic
material. The court ruled that Myriad's patents claiming (a) isolated BRCA gene
sequences, and (b) methods for comparing or analysing BRCA gene sequences to
diagnose a predisposition for breast cancer, were invalid.[33]
2.36
As part of its inquiry, the Senate Community Affairs References Committee
received advice from the USPTO that the decision in the Myriad case was not at
that stage binding on the USPTO, and that its examination policy has not
changed in response to the decision. Accordingly, the USPTO 'continues to issue
patents directed to isolated genes, proteins and their derivatives that meet
patentability requirements under the United States patents laws'. The USPTO
advised in the event that a final decision is delivered on the case in a higher
court, such as the US Court of Appeals for the Federal Circuit or the US
Supreme Court, it would 'conform its policy to that decision'.[34]
2.37
Following the decision, Myriad Genetics appealed to the Court of Appeals
of the Federal Circuit. On 29 October 2010, the United States
Department of Justice filed an amicus curiae brief[35]
with the court which outlined disagreement with some of the positions taken in
Judge Sweet's decision, and agreement with others. In particular, the brief
agreed that genomic DNA that is simply isolated should not be patentable:
The boundary between eligible and non-eligible subject matter
is defined, in significant part, by the settled principle that the patent laws
do not embrace laws of nature, physical phenomena, or abstract ideas...In
attempting to apply that principle here, the district court erroneously cast
doubt on the patent-eligibility of a broad range of manmade compositions of
matter whose value derives from the information encoding capacity of DNA. Such
compositions - e.g., cDNAs [complementary DNA], vectors, recombinant plasmids,
and chimeric proteins, as well as countless industrial products, such as
vaccines and genetically modified crops created with the aid of such molecules — are in every meaningful sense the fruits of human ingenuity and thus qualify
as "human-made inventions" eligible for patent protection...The
district court correctly held, however, that genomic DNA that has merely been
isolated from the human body, without further alteration or manipulation, is
not patent-eligible.[36]
2.38
On 29 July 2011, the Court of Appeals for the Federal Circuit overturned
much of Judge Sweet's original decision. In particular, it reversed by 2-1 Judge
Sweet's finding 'that Myriad's composition claims to "isolated" DNA
molecules cover patent-ineligible products of nature under [US patent law]
since the molecules as claimed do not exist in nature'.[37]
The plaintiffs have indicated they will consider requesting the entire
appellate court rehear the gene patenting aspects of the case or appealing the
decision to the United States Supreme Court.[38]
Australia
2.39
On 8 June 2010, Maurice Blackburn Lawyers, representing Cancer Voices
Australia and Ms Yvonne D'Arcy, commenced proceedings in the Federal Court of
Australia, seeking to invalidate the BRCA patents in Australia. Court dates for
hearings are provisionally set for 20 February 2012 onwards.[39]
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