CHAPTER 4

KEY ISSUES RAISED IN EVIDENCE

Introduction

4.1        Key issues were raised in evidence in relation to a number of topics. These included:

• the drafting of the Bill;
• the efficacy of the Bill;
• the need for the Bill;
• the nature of discovery and invention;
• the impact of the Bill on healthcare;
• the impact of the Bill on investment;
• the impact of the Bill on research and development;
• the impact of the Bill on access to products;
• the impact of the Bill on access to knowledge;
• ethical issues related to the Bill;
• Australia's international obligations;
• support for the Raising the Bar Bill; and
• support for other policy approaches.

Drafting of the Bill

4.2        A number of concerns were raised regarding the terminology used in the Bill. These concerns related to both the proposed amendments to current paragraphs 18(1)(a) and 18(1A)(a) as well as the proposed exclusion of 'biological materials' from patentability. In particular, several individuals and organisations noted that unclear or ambiguous provisions would result in uncertainty for patent applicants and investors in research, and could result in unnecessary and costly litigation.[1]

Title of the Bill

4.3        Some submissions and witnesses considered that the title of the Bill does not accurately reflect the content of its provisions. For example Professor Dianne Nicol was concerned that there is confusion about the Bill in the biotechnology sector, with some companies assuming it only applies to 'human genes'.[2] FB Rice & Co described the title of the Bill as 'misleading' as it implies that the Bill relates to 'human' biological material, while the proposed amendments in the Bill encompass biological material from any source.[3] Similarly, Griffith Hack and Griffith Hack Lawyers highlighted that '[d]espite the title of the Bill purporting to be for 'human genes and biological materials', nowhere within the Bill is there any limitation on the exclusion of patentability to biological materials derived from humans'.[4]

Manner of manufacture

4.4        Dr Luigi Palombi, the 'principal drafter of the Bill and Explanatory Memorandum',[5] outlined that the amendments to paragraph 18(1)(a) are intended to overturn 'two longstanding but, problematic' Full Federal Court of Australia decisions: Anaesthetic Supplies Pty Ltd v Rescare Ltd and Bristol-Myers Squibb Co v F H Faulding & Co Ltd.[6] Dr Palombi argued:

In so doing the Bill restores the original intent of the Patents Act, 1990, and one that goes to the heart of Australian patent law, by preventing the grant of patents over subject matter which would be "contrary to the Law, nor mischievous to the State, by raising Prices of Commodities at home, or Hurt of Trade, or generally inconvenient". This aspect of the Bill is designed to re-impose on the courts an obligation to inquire into the suitability, for the grant of a patent monopoly, subject matter that may be illegal, immoral, disreputable or otherwise injurious to Australian society or the economy and reinstate their power to strike these down ab initio, as if they had never existed.[7]

4.5        However, other submissions did not agree that this effect is clear in the proposed amendment. ResMed considered the amendment which inserts the phrase 'including the proviso' may reflect 'a concern that the "generally inconvenient" proviso is not currently law'. However in its opinion, while there may be doubt over how the 'generally inconvenient' proviso may operate, it is clear that it does in fact operate.[8]

4.6        Professor Natalie Stoianoff, Dr Ann Kurts and Dr Mark Lutherborrow considered the amendment to modify reference to the Statute of Monopolies in section 18 of the Patents Act to be 'superfluous'.[9] Similarly, Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee considered that the change would 'add nothing to the development or state of the law relating to 'manner of manufacture' and would not achieve any paradigm shift in the relevance of social and ethical dimensions to determinations of patentability'. In their view, it is clear from the case law that the proviso to section 6, including the question of whether the invention would be 'generally inconvenient', is already incorporated into the 'manner of manufacture' test.[10] Professor Nicol added 'if we want to have some sort of public policy or morality provision then it would be better to state that explicitly rather than reaffirming an old provision from way back in 1623'.[11]

4.7        La Trobe University questioned the clarity of the amendments to paragraphs 18(1)(a) and 18(1A)(a):

The introduction of the proviso of the Statute of Monopolies provides no clarity or certainty that the resultant interpretation will in fact be to exclude discoveries from patentability. Moreover, the Bill does not link the introduction of the proviso with the restriction of biological materials. The applicability of the proviso to the other branches of science and engineering is therefore uncertain and should be clarified. Discoveries and inventions are not restricted to the field of biology.

Unclear legislation should be avoided at all costs. In its current form, the Bill would result in uncertainty for patent applicants and investors in scientific research and ultimately cause unnecessary litigation.[12]

4.8        Davies Collison Cave could not perceive a difference between the current term 'within the meaning' and the Bill's proposed amendment 'within the full meaning'. It cautioned that the effect of the change 'will be to simply introduce an unnecessary ambiguity into the legislation'. Similarly to ResMed, Davies Collison Cave considered that it is not apparent what is meant by the proposed term 'including the proviso', arguing that the addition of the term 'including the proviso' to the current wording of section 18 of the Patents Act would also introduce unnecessary ambiguity.[13]

4.9        Dr Charles Lawson observed that it is '[p]erhaps surprising, [that] a law directed to high technology in 2011 reaches back nearly 400 years to 1623 to a concept of "manner of manufacture" as a way of drawing a distinction between what is, and what is not, patentable'. While he considered that the Patents Act should be subject to a thorough review (particularly in relation to competition policy), his view was that 'the formulation in section 6 of the Statute of Monopolies...is probably not appropriate to the modern Australian economy'.[14]

4.10      In their joint submission, the Department of Innovation, Industry, Science and Research (DIISR) and IP Australia highlighted that the recent Advisory Council on Intellectual Property (ACIP) report on the 'manner of manufacture' had recommended amending the Patents Act to codify the legal principles established by the NRDC case. DIISR and IP Australia considered that 'any recommendations for change to subject matter eligibility should follow from consideration of the ACIP recommendations'.[15]

4.11      The ACIP Report noted:

Over time, the focus of the 'generally inconvenient' proviso has changed. The courts have imbued it with different functions – sometimes ethical, sometimes economic. The Australian High Court has referred to 'general inconvenience' a number of times as a possible ground of invalidity, but has neither applied that proviso to revoke a patent nor extinguished the concept.[16]

4.12      The ACIP Report supported the removal of the 'general inconvenience' proviso in favour of a general exclusion 'so as 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'.[17]

Exclusion of biological materials

4.13      A number of submitters and witnesses expressed their concerns regarding the undefined use of the terms 'derivatives', 'components' and 'substantially identical' in the proposed exclusion of biological materials. For example, Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee stated:

There are terms in the Bill that are not defined. Depending on the way they are interpreted, they could have far-reaching or limited effect. It is not at all clear what is intended by the use of these terms, nor whether they will be interpreted in a way that corresponds with the original intention.[18]

4.14      Davies Collison Cave also argued that the proposed prohibition from patentability for 'biological materials' and the associated definition of 'biological materials' 'would introduce substantial and wide ranging uncertainty in the Patents Act 1990 arising principally from the scope and potential impact of these proposed amendments, particularly in relation to the ambiguity, or lack of clarity which exists in relation to most of the terminology to be introduced'.[19]

4.15      The use of the term 'substantially identical' was viewed by some submitters and witnesses as particularly problematic.[20] Professor Natalie Stoianoff, Dr Ann Kurts and Dr Mark Lutherborrow argued:

...the term "substantially identical" is ambiguous. It is unclear as to what quantum or character a lack of identity with a naturally occurring substance would be required before a synthetic molecule would be considered patentable. The use of this language introduces further ambiguity rather than clarifying the definition of patentable subject matter.[21]

4.16      Professor Andrew Christie argued that the focus on identicality 'runs the risk of precluding the potential for reward of a patent where it should be granted'. He noted that submitters to the inquiry had provided examples of biological materials 'which are changed but changed as little as possible to achieve the effect'. In these examples, inventions which meet the other requirements of patentability (novelty, inventiveness and utility) could be 'wrongly taken out of consideration for patentability' because they are substantially identical to material existing in nature.[22]

4.17      The National Health and Medical Research Council (NHMRC) was concerned about the proposed open definition for 'biological materials'. In particular, the NHMRC highlighted the lack of definition of 'substantially identical' which 'has the potential to obstruct and suppress innovation and translation of the outcomes of biomedical research into products and/or treatments to improve the health and wellbeing of Australians and people around the world'. As an example, the NHMRC noted a product of synthetic biology, while not a biological material, is modelled on biological material and would appear to be excluded under the Bill.[23] Similarly, the ALRC noted that it would be difficult to effectively define an exclusion relating to genetic materials. In relation to the formulation used in the Bill 'it is unclear...whether cDNA [complementary DNA] is "substantially identical" to genomic DNA'.[24]

4.18      However, Dr Luigi Palombi argued that the term 'substantially identical' is not new to intellectual property law, noting its extensive use in trade mark law. He stated that 'it is open for an Australian court to interpret the term "substantially identical" in the context of section 18(2)(b) by drawing a distinction between a naturally occurring biological material and one that has been modified so that it can no longer be said to be a product of nature but, instead, be a product of humankind'.[25] Further:

While it may be argued that absent a statutory definition of 'substantially identical' there is some uncertainty in how the Australian courts will interpret and apply section 18(2)(b), the counter to that argument is that there already exists a body of law, albeit foreign, which provides guidance on point...[26]

4.19      Dr Palombi also considered that the term 'substantially identical' is necessary as an 'anti-avoidance provision' in order to 'avoid the wordplay that patent attorneys constantly apply to these sorts of claims'.[27]

Increased possibility of litigation

4.20      Unclear provisions in the Bill were seen to potentially create uncertainty, which would discourage investment in research and encourage unnecessary litigation. For example, AusBiotech predicted 'a frenzy of legal activity' would be necessary to interpret the language of the Bill.[28] The Institute of Patent and Trade Mark Attorneys (IPTA) highlighted the risks that the unclear language in the Bill would have, meaning that the community would be reliant on the courts to define the Bill's boundaries. This could result in long and costly litigation:

It should also be remembered that when a biotechnology case is litigated, the clarification which it provides is limited to the scope of the issue which has been brought before the court...The community would be, therefore, reliant on the handing down of multiple decisions to bring clarity across the scope of the Bill. Whether or not this would occur is entirely dependent on the willingness of parties to both initiate and then follow through (i.e. not settle) their litigation. Realistically, this process is beyond anyone's control and would likely take decades to resolve, at enormous cost.[29]

4.21      Similarly, Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee noted that these uncertainties in terminology could result in patents claiming innovations with respect to biological materials in Australia being subject to 'protracted and expensive litigation'.[30] Griffith Hack and Griffith Hack Lawyers suggested that if the Bill were implemented 'there will be many millions of dollars wasted on patent attorney and lawyers' fees debating the interpretation of the exclusion, money that would be better spent on research and commercialisation'.[31]

Possible amendments to clarify meaning

4.22      Possible amendments to the exclusion for biological materials were also suggested (and subsequently supported by Dr Luigi Palombi).[32] For example, the Cancer Council Australia and the Clinical Oncological Society of Australia (CCA/COSA) proposed that the exclusion on patentability in the Bill (Item 3) should be replaced with:

(b) biological materials whether isolated or purified or not and however made which are identical to such materials as they exist in nature.[33]

4.23      CCA/COSA considered that this would clarify the distinction between invention and discovery. The amendment would replace several terms considered problematic in other submissions, including 'substantially', 'components' and 'derivatives'.

4.24      Further, CCA/COSA recommended that the provision of the Bill which defines 'biological materials' (Item 4) should also be replaced to read:

(5) In this section:

biological materials, in section 18, includes DNA, RNA, proteins, cells and fluids including their components

identical, in section 18, means a biological material which is structurally and functionally identical and where any structural change or difference is immaterial to its function.

4.25      CCA/COSA considered that these suggested amendments to the Bill would add clarity, would ensure biological materials which have been structurally and functionally altered continue to be patentable, and 'should assure competitive researchers and investors that the patentability of biological materials adapted inventively for industrial use remains a commercial incentive'.[34]

4.26      At the public hearing on 28 April 2011, Senator Heffernan tabled a document with the committee which outlined similar proposed amendments to the Bill. Senator Heffernan's proposed amendments differ from the CCA/COSA amendments by proposing a more concise definition of 'identical':

identical, in section 18, means a biological material which is structurally and functionally identical.[35]

4.27      Some witnesses considered that the proposed amendments would address their concerns in relation to the scope of the Bill.[36] However, others did not consider these amendments to the Bill would address their concerns.[37] For example,
Professor Dianne Nicol and Mr Johnathon Liddicoat asserted that the amendment would not resolve the questions they raised regarding the Bill's lack of clarity, broad scope and potential for unintended consequences.[38]

Support for the Bill's approach

4.28      However, Professor Peter Drahos did not consider the language of the Bill to be too broad. In relation to the term 'biological materials', he noted that other jurisdictions had also used general language in this area and '[t]o refer to some subset of biological materials...sets up a dangerous inference that other naturally occurring materials that have been isolated are patentable'. In relation to the term 'substantially identical', he noted that this concept is used in other areas of intellectual property law and the concept is important to prevent applicants introducing minor variations to defeat the purpose of the Bill.[39] In a similar vein, Ms Anna George considered the approach taken in the Bill to be 'simple, clear and unambiguous'.[40]

4.29      In contrast to many of those who expressed apprehensions about the breadth of biological materials covered by the language in the Bill, the National Coalition of Public Pathology was concerned that the inclusion of specific examples in the definition of 'biological materials' would limit the range of biological materials covered. Further, it considered that the list was not complete and may change over time in light of new knowledge and discoveries.[41]

Efficacy of the Bill

4.30      Many submissions and witnesses expressed their concern that the drafting of the provisions of the Bill would not achieve the Bill's intent, as outlined in the EM. The EM states:

The purpose of this Bill is to advance medical and scientific research and the diagnosis, treatment and cure of human illness and disease by enabling doctors, clinicians and medical and scientific researchers to gain free and unfettered access to biological materials, however made, that are identical or substantially identical to such materials as they exist in nature.[42]

Method claims

4.31      Some submitters and witnesses noted that the Bill's exclusion on biological materials would not exclude from patentability therapeutic or diagnostic methods, even if these methods involve the use of biological material.[43] Professor Natalie Stoianoff, Dr Ann Kurts and Dr Mark Lutherborrow commented that both therapeutic and diagnostic methods are patentable under current Australian law. An exclusion from patenting the substance used would not prevent these methods or formulations from being patented.[44] Similarly, the Law Council of Australia considered the Bill 'misconceived' as 'the Bill would not affect the patentability of the diagnostic method which originally sparked the current debate: the Myriad BRAC1 and BRAC2 tests'.[45]

4.32      Dr Tania Obranovich from the Institute of Patent and Trade Mark Attorneys believed that, as diagnostic methods would remain patentable under the Bill, it 'would do very little to alleviate the very real concerns of the community' and could 'unintentionally create a range of new problems'.[46] Unintended consequences were also predicted by FB Rice & Co, should the Bill cause a shift from product claims to method claims in patent applications. It noted that the 'well known principle of the patent system is that product claims are easier to enforce than method claims'. If product claims for patented inventions are excluded by the Bill, 'patentees may have to spend more time and money to prove that their rights are being infringed'.[47]

4.33      Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee also argued that the Bill was too narrow in this respect:

While the Bill seeks to exclude biological materials it does not exclude methods of using those materials. Hence, some of the most controversial aspects of patenting in the field of biotechnology are not fully addressed by this Bill, particularly methods of diagnostic testing and non-commercial research methods. The Bill also does not address problems created by broad downstream patent claims. Moreover, experience in Europe suggest[s] that specific exclusions of this nature tend to be worked around by creative drafting.[48]

Timing of legislative intervention

4.34      During the inquiry, an argument was made that that the Bill may be too late to address the problems it seeks to solve.[49] This argument reflects the conclusion in the ALRC Report in 2004 that 'if there had been a time to recommend that gene patents should not be patentable, that time has long since passed'.[50] For example, La Trobe University suggested that, because of the completion of the Human Genome Sequencing Project in 2003, '[i]t is likely that the effect of the Bill would be to shut the gate after the horse has bolted, since the genes discovered by the project are already either patented or in the public domain and therefore not able to be patented'.[51] Similarly, the Law Council of Australia submitted:

...the argument now being mounted in respect of patents claiming genes and gene sequences is many years after the priority date of the particular patent at which point the criteria for patentability were considered. In the area of gene technology, what was patentable 20 years ago is likely not to be patentable today...given the rapid development of the technology area in the meantime...[T]he conclusion of the human genome project has had a significant effect on what is and what is not now patentable.[52]

4.35      The Association of Australian Medical Research Institutes noted that most patents only have a 20-year duration and many of the early gene sequence patents with overly broad claims were issued in the late 1980s and early 1990s. It concluded that many of these patents have now either expired or are nearing expiration; and with each new field of technology, as patent examiners have become more expert in understanding the nature of a new field, the scope of patent claims has over time become more appropriate.[53]

4.36      However, IVD Australia suggested that the Bill could affect existing patents, noting there are no transitional provisions included that would limit its application only to patents applied for after the Bill passes.[54] The Department of Health and Ageing also noted that the Bill does not include transitional provisions and does not provide clarity over the effect on patent applications currently being examined by IP Australia.[55] DIISR and IP Australia commented that effects on existing patents could raise constitutional issues regarding the compensation of acquisition of property by the Commonwealth.[56]

Support for passage of the Bill

4.37      Others supported the passage of the Bill. The Australian Reproductive Health Alliance argued that the Bill would clarify and reinforce the existing provisions of the Patents Act 'to give the clear message that "scientific discoveries" should not be the subject of patents'.[57] Similarly, Ms Stephanie Gleeson argued:

As biotechnology has potentially many economic, social, environmental and health consequences, the best course of action would be for the Parliament to pass this current amendment as a safeguard against ad hoc developments by the courts. Passing this amendment will provide clarity for the law and encourage cooperation between researchers to reward scientific endeavour whilst ensuring public access to publically owned biological materials.[58]

4.38      Dr Luigi Palombi acknowledged that the Bill is only one of several measures which need to be taken in order to improve patient access to genetic tests. However, '[w]hile other policy and legislative changes are required this Bill is an integral part of the solution'.[59] He described the Bill as follows:

It is a nuanced, controlled and expertly crafted response to a specific problem in Australia's patent system. It is like a surgeon's scalpel removing a festering boil. That it prevents the patenting of biological materials which exist in nature is an achievement in itself. It puts to an end, once and for all, any suggestion that the mere isolation of a biological material from its natural environment transforms that material from a product of nature into a product of invention. But it does more. It also prevents the patenting of modified biological materials when those modifications are so minor, insignificant or immaterial that they cannot be said to transform the biological material into being an 'invention'.[60]

Scope of the Bill

4.39      The Second Reading Speech characterises the Bill as 'very narrow' and only seeking 'to clarify and apply existing patent law'.[61] Dr Luigi Palombi considered a narrow scope of exclusion was contemplated by the Bill. He noted the following matters would fall outside of the proposed prohibition:

(a) products, process or methods that make use of, or include as a component or components, naturally occurring biological materials, even if identical or substantially identical to any that exist in nature, in such things as diagnostics, pharmaceuticals, therapeutic products or methods, treatments and cures; and

(b) biological materials derived from naturally occurring biological materials provided such derivatives are not (a) identical or (b) substantially identical to any that exist in nature; and

(c) naturally occurring biological materials which have been modified, genetically or otherwise, so that in their modified form the way they function is so changed when compared to their premodification state that they can no longer be considered to be identical or substantially identical to any that exist in nature.[62]

Concerns regarding the Bill's scope

4.40      However, a large number of submitters and witnesses raised concerns regarding the broad range of areas which could be affected by the exclusion on patentability of 'biological materials' in the Bill.[63] AusBiotech found the scope of the Bill 'broad and seemingly without limits'. It believed the Bill would encompass:

[G]enes, DNA, RNA, cDNAs, oligonucleotide primers, proteins, peptides and amino acids, lipids, carbohydrates, vaccines, bacteria, viruses, antibiotics, enzymes, hormones, immunoglobulins and other blood products, stem cells, anti-toxins, antivenoms, skin and other tissues, allergenics, probiotics, antibodies, epitopes, monoclonal Abs, recombinant therapeutics and other personalised medicines.[64]

4.41      If the Bill were to pass, AusBiotech foreshadowed profound negative impacts across diverse sectors of the Australian economy and community, including those focused on: agriculture; animal production; diagnostics; vaccines; and biopharmaceuticals to treat major diseases such as arthritis, cancer and multiple sclerosis.[65]

4.42      Several submissions which opposed the Bill noted that the origin of the public debate was in relation to patents on human gene sequences. They argued that the broad exclusion in the Bill for 'biological materials' was therefore unjustified. For example, Professor Ian Frazer commented that the 'Bill is intended to prevent the patenting of human genes and biological materials...[T]his intent is much broader than would be necessary to obviate my concerns with the Myriad genetics patents'.[66]

4.43      FB Rice & Co argued:

There are many Australian companies whose existence relies upon the patenting of biological materials such as antibodies and stem cells. In our opinion, these companies can rightly feel aggrieved by their technology seemingly being encompassed by the Bill because until now the public debate has essentially been limited to human genes and genetic testing.[67]

4.44      Others emphasised the importance of the patents over biological material which may be affected by the amendments proposed in the Bill. DIISR and IP Australia stated that '[p]atents over biological material are fundamental to innovation and investment in the development of new and beneficial medical, industrial, environmental technologies and food'.[68]

4.45      Eli Lilly Australia used the example of therapeutic antibodies to illustrate the potential impact of the Bill, noting that such antibodies are being developed as treatments for a wide range of diseases, including various infectious diseases, cancers, autoimmune diseases, Alzheimer's disease, diabetes, cardiovascular disease and various musculoskeletal diseases:

[M]any of these antibodies are fully human in structure, meaning they are derived from human antibody genes...[B]ecause they are derived from human genes, therapeutic human antibodies or the DNA that encodes them could be viewed as substantially identical to materials as they exist in nature'.[69]

4.46      The Walter and Eliza Hall Institute of Medical Research (WEHI) asserted that the Bill 'goes far beyond human gene patents, therapeutics and diagnostics...[I]t relates to all biological material and would impact negatively on many other areas such as the veterinary, agriculture, aquaculture, biofuel, brewing and biomaterials sectors'. Without evidence-based analysis, WEHI suggested that the risks of unintended negative economic and social consequences could be considerable.[70] The Peter MacCallum Cancer Centre held a similar position:

The amendments, if accepted, may have profound implications not only in the field of medicine (antibiotics, antibodies, synthetic hormones), but also veterinary science, agriculture, industry and the rapidly expanding field of green and renewable energy...There has been insufficient discussion or evidence available to make any changes to patent law that are so profound in their potential impact at this stage.[71]

4.47      Evidence to the committee highlighted that, because the previous public discussion had focused on patents on human gene sequences, the impact on the biotechnology sector of an exclusion on patenting biological materials has not been adequately considered. For example, Professor Natalie Stoianoff, Dr Ann Kurts and Dr Mark Lutherborrow noted that the previous Senate inquiry had been directed to the impact of gene patenting on human health and '[t]o date there has been no [i]nquiry or any other basis for asserting that biological materials in general should be excluded from patent protection'.[72]

4.48      CropLife Australia argued that there were potential impacts for the agriculture sector in Australia which had not been considered, and had not been dealt with during the previous inquires into gene patents. In particular, it noted the lengthy regulatory hurdles for new genetically modified (GM) crops, the need for patent protection to prevent 'free-riders', and the importance of GM crops for Australian farmers to remain viable in an international marketplace:

This Bill would effectively stop the commercialisation of future GM crops in Australia because companies would refuse to risk their intellectual property by releasing it here. This would undermine hundreds of millions of dollars in private and public investment in this research and would have major implications for how Australian science is viewed globally. In addition to these effects, the competitiveness of Australian agriculture would be greatly reduced.[73]

4.49      Additionally, CropLife Australia highlighted the importance of agricultural chemicals, such as pesticides, and outlined a number of pesticides isolated from naturally occurring compounds:

Overall, the proposed Bill would lead to a reduction in newer softer chemicals being used in agriculture and an increased reliance on older, more synthetic chemicals, many of which are currently subject to regulatory review.[74]

4.50      Agrifood Awareness Australia agreed that, while the initial focus of the Bill was on medical applications, the Bill would 'impact all areas of biotechnology research and development, including Australian agriculture'. This would 'have negative consequences for the agriculture sector, leading to a decline in the global competitiveness of our agriculture sectors with flow-on impacts to rural and regional communities'.[75]

4.51      The Institute of Patent and Trade Mark Attorneys (IPTA) was concerned that the Bill 'arguably encompasses virtually all biological materials even where they are structurally different from their native counterparts'. It noted that the 'active agents of many of the pharmaceutical products we take for granted are in fact biological materials isolated from natural sources or their derivatives'.[76] Dr Tanya Obranovich from the IPTA elaborated on this point in evidence:

The bill proposes to exclude from patentability all biological materials which are identical or substantially identical to materials as they exist in nature. Since the ban extends to all organisms, the bill would adversely impact not only health care but also sectors as diverse as agriculture, animal husbandry and food technology. The breadth of biological materials which the exclusion would encompass is enormous. Therefore, the potential impact of the functioning of all of these sectors would be significantly impacted.[77]

4.52      However, the Cancer Council Australia and the Clinical Oncological Society (CCA/COSA) supported a broader approach:

...genes are not the only natural biological materials fundamental to medical research and healthcare services that can be locked up by commercial monopolisation. There is a valid view that excluding only genetic products from patentability would not protect from monopoly other biological materials integral to competitive medical research, such as proteins and peptides.[78]

4.53      While he maintained reservations regarding the provisions of the Bill, Dr Graeme Suthers from the Royal College of Pathologists also noted that there are advantages in phrasing an exclusion in general terms, such as 'biological materials', because 'there are lots of diagnostic chemicals that we want to analyse and that we need to analyse in the delivery of health care...[T]hey are not just genetic ones'.[79] Similarly, Professor Peter Drahos stated:

[T]he phrase 'biological materials' is used for the purposes of exclusion because what you are trying to do is to ensure that the law excludes those things that are naturally occurring. To confine it to some subset sets up the dangerous inference that other naturally occurring biological materials are patentable.[80]

Need for the Bill

4.54      Conflicting evidence was received regarding the need for the Bill.

No necessity for the Bill

4.55      Many of the submitters and witnesses opposed to the passage of the Bill highlighted that its proposed amendments are not supported by the findings of the three most recent public inquiries examining this area: the ALRC Report; the Senate Community Affairs References Committee report; and the ACIP Report.[81] For example, IVD Australia argued that there is 'little evidence to support claims that gene patents restrict research or that Australian scientists lack free access to biological materials because of issues with pre-existing patents'. It noted that the finding in the Senate Community Affairs References Committee report that 'the evidence does not show that gene patents are systematically leading to adverse impacts [in the areas of healthcare and medical research]' is 'at odds with the policy behind the Bill'.[82] Similarly, in the view of DIISR and IP Australia, there was no evidence that access to diagnostic testing or medicines is restricted or that present patentability of biological material is impacting adversely on research activities in Australia.[83]

4.56      Others emphasised their own experiences in relation to patents. The Walter and Eliza Hall Institute of Medical Research (WEHI) asserted that in its experience, 'patents have minimal or no negative impact on research and the effects predicted by proponents of the "anti-commons issue" are not borne out in the available data, and fears of [patents] blocking the use of upstream discoveries are largely unfounded'. Using the example of the BRCA1 patent, WEHI highlighted that the grant of that patent had not impeded subsequent research or patent applications.[84] This point was also emphasised by AusBiotech, which noted that the grant of the BRCA1 patent had not prevented 'over 5,500 BRCA1 primary sequence publications...[w]ith no fewer than 49 Australian research organisations having contributed to this total'.[85]

4.57      This position was endorsed by GlaxoSmithKline:

There is no coherent body of evidence establishing that patents have had a negative impact on access to healthcare or have impeded research to any significant degree in Australia or elsewhere.[86]

Necessity for the Bill

4.58      However, other evidence to the committee emphasised the problems with the current patent system which the Bill aims to solve or alleviate. In particular, the Generic Medicines Industry Association (GMIA) had the view that innovation, research, and market competition have been unnecessarily stymied in the Australian pharmaceutical and biopharmaceutical industries because of the increasing reach of patent rights:

Patent monopolies regarding critical pharmaceuticals and biopharmaceuticals which have been invalidated elsewhere have either remained unchallenged in Australia (due to the relatively small size of the Australian market) or have been held to be valid in Australia (due to significant differences in Australian law). Australian industry and the Australian public have been disadvantaged and will continue to be disadvantaged if these issues are not rectified.[87]

4.59      GMIA argued that case law in Australia has drifted away from global trends in relation to standards of patentability, resulting in patents being easier to obtain and harder to revoke than in the rest of the world. It claimed the threshold for 'inventive step' is easier to meet in Australia and patent examinations are less robust:

Patents that were not granted or have been invalidated in other jurisdictions continue to deliver royalties and profits to the owners and licensees of equivalent patents in Australia, resulting in higher prices to the Australian public.[88]

4.60      GMIA perceived that policy positions are changing in Europe and the United States in relation to patenting biological materials. For these reasons, GMIA supported legislative intervention in Australia:

GMIA acknowledges that Australia will be "ahead of the curve" if the Gene Patenting Bill is implemented without amendment, but supports Australia aligning its position with global trends, and taking the global lead in this important area.[89]

4.61      GMIA also highlighted the difficulties in challenging inappropriate patents and obtaining access to some patented substances:

When we go to challenge a patent, we normally expect—especially when we go through the appeals—that we are going to be delayed anywhere between 2½ to three years to get through all the appeals and the legal system, and it will normally cost somewhere in the region of $2 million to $3 million. That is what you are up against when you have to challenge a patent even if the patent is non-valid.[90]

4.62      Mylan, a large generic pharmaceutical company, echoed several of GMIA's concerns:

The patenting of naturally occurring biological materials is stifling medical and scientific research as well as the diagnosis, treatment and cure of human illness and disease. Such patenting prevents doctors, clinicians and medical and scientific researchers from gaining free and unfettered access to these materials...[T]hese monopolies go well beyond the traditional scope of patent protection and are unfairly hampering free competition in the development of biogeneric medicines.[91]

4.63      The increasing importance of genetic testing and biological materials was also highlighted by those supporting legislative change. For example, Dr Graeme Suthers from the Royal College of Pathologists noted that greater understanding of human genetics is leading to 'more and more genetic testing' and the type of therapeutics being developed are shifting 'more and more [to] biological [treatments] rather than straight chemicals'.[92] However, others considered the increasing importance of genetic and biological materials in healthcare was an argument against the excluding these materials from the patent system. Dr Anna Lavelle from AusBiotech stated:

In the modern world, the new age of medicines will be based on biologics and that is what makes this bill so potentially dangerous in terms of thwarting new medicines, therapies and technologies that are coming through, and that is based on the last 30-odd years of genetic and biological research.[93]

4.64      The Cancer Council Australia and the Clinical Oncological Society of Australia (CCA/COSA) had the view that problems with the gene patent legal framework are 'well-documented'. They noted that attempts to monopolise genetic tests for breast and ovarian cancer risk through the enforcement of a patent licence have been withdrawn, following a sustained public outcry. However, 'there was nothing in the law that could have protected Australian women's access to testing in public laboratories'.[94]

4.65      Professor Peter Drahos argued that the significant pressures on national patent offices, including in Australia, are negatively affecting the quality of patent examination being undertaken. He suggested that creating 'exemption[s] in certain areas' is one of a series of 'regulatory adjustments' which could be taken to address this issue.[95]

Discovery and invention

4.66      A number of submitters and witnesses focused on the distinction between discovery and invention in the granting of patents over biological materials. This evidence highlighted both the complexity of the subject and the variety of views held regarding it.

4.67      The EM states that the Bill 'reinforces the applicability of the distinction between discovery and invention' in the Patents Act. Further:

It has long been accepted that natural phenomena are not patentable inventions. This is because the elucidation of a natural phenomenon such as the discovery of a naturally occurring thing, while adding to the storehouse of human knowledge, does not transform it into a product of humankind...This distinction between invention and discovery has thus been an accepted part of English patent law for hundreds of years and was received law by the Australian colonies. After Federation the Australian parliament maintained that distinction in the Patents Act, 1903. Likewise, successive Australian parliaments followed suit in the Patents Act, 1952 and the Patents Act, 1990.[96]

4.68      However, Dr Chris Dent provided the committee with his research, which focuses on the complex historical underpinnings of the Statute of Monopolies. He argued that there 'is no evidence that there was a clear distinction between invention and discovery in the early 17^th century' and it is therefore not correct for the EM to claim that such a distinction 'is in keeping with the original intent of the English Parliament'. He concluded that 'to import the whole of s.6 of the Statute of Monopolies would only make the issue of interpretation more challenging'.[97]

4.69      Submitters and witnesses in support of the Bill emphasised the distinction between discoveries and inventions. For example, Mylan stated:

Biological materials that are identical or substantially identical to any that exist in nature should not be patentable because they are a product of nature and have not been transformed into a product of humankind, historically regarded as a prerequisite for patentability. Simply put, they are not 'inventions'. Just as a cotton ball removed from a cotton plant is not an invention, neither is a human gene mutation linked to, say, breast or ovarian cancer.[98]

4.70      However, the Group of Eight universities considered the Bill to be 'unnecessary' as, in their view, the distinction is clear in the current wording of the Patents Act:

While the requirement to be a manner of manufacture...can be open to a wide interpretation, the requirement for an inventive step should be sufficient to ensure that discoveries cannot be the subject of granted patents.[99]

4.71      Professor Andrew Christie argued that the Bill uses the wrong criterion for drawing the distinction between discovery and invention:

The distinction between a non-patentable discovery and a patentable invention is not determined by whether or not the material is identical or substantially identical to that which exists in nature. Rather, the distinction is determined by whether or not the material is an artificially created state of affairs...The 'artificially created state of affairs' criterion has been recognised as the appropriate test for distinguishing between a discovery and an invention since at least the 1959 decision of the Australian High Court in [the NRDC case]. In adopting this form of words, the High Court sought to make it clear that the key determinant of whether subject matter is an invention is the extent to which the alleged inventor has 'created' (as distinct from 'discovered') the material.[100]

4.72      Similarly, Dr Tania Obranovich from the Institute of Patent and Trade Mark Attorneys noted that 'across the entire developed world isolated biological materials are regarded as patentable, on the basis that they represent an artificially created state of affairs'. However, she pointed out that the fact that isolated biological materials can form patentable subject matter does not mean they will be patented, as new inventions must also meet the other requirements of patentability.[101]

4.73      Conversely, Dr Luigi Palombi argued that the intent of the Bill is supported by judicial decisions going back more than 150 years:

[P]atent law and the judicial interpretation of patent law in the United States, the United Kingdom and Australia is that you cannot patent a composition of matter or substance if that substance is a natural phenomenon. It matters not how the substance is made; it matters not what the substance does. If the substance is identical to a natural phenomenon then, regardless of how much time, sweat, blood and money it has taken to make it or develop a process of making it, the substance itself cannot be the subject of a valid patent monopoly.[102]

4.74      In considering the Raising the Bar Bill, the Royal College of Pathologists of Australasia put its view that the distinction between a discovery and an invention with utility lies at the heart of the test for patentable subject matter, and should not be incorporated into flexible concepts of manner of manufacture. It considered that there should be an explicit, proscriptive, plain language test for patentable subject-matters 'which precludes discoveries from consideration, irrespective of the utility of those discoveries'.[103]

4.75      Others supported the intention of the Bill to provide clarity regarding the distinction between discoveries and inventions for biological materials, but did not support the specific provisions of the Bill itself.[104] For example, while it maintained concerns about the Bill's breadth and effectiveness, the Department of Health and Ageing supported the Bill's intention to clarify the distinction between a discovery and an invention:

It is the Department's view that isolated gene sequences that are homologous to those that occur naturally are discoveries, and we have concerns about these being considered patentable subject matter eligible for the grant of a patent monopoly. Despite the energy and ingenuity expended to identify the natural function of a particular gene, its mere isolation from the larger human genome and extraneous cellular material does not give rise to an invention where the isolated gene sequence remains identical to the sequence of its native homologue.[105]

4.76      However, Ms Fatima Beattie from IP Australia noted that new inventions can be created 'by deconstructing' existing material:

[Y]ou can take a large molecule and you can create a new invention out of that large molecule by deconstructing it, by creating a smaller molecule which has a different functionality, a different structure and a different application from that large molecule...Isolated genetic sequences are, in fact, molecules that have been created by deconstructing a larger molecule. An isolated gene sequence is created by breaking covalent bonds from a molecule and finding a practical use for that molecule. That is what makes them eligible for consideration of a patent grant.[106]

4.77      James & Wells Intellectual Property also highlighted the aspect of 'isolation' which was viewed as the key criterion in considering the patentability of biological materials. It argued that 'it is not the ability to isolate the gene that makes it inventive and patentable...it is most often the intensive research which results in the identification of advantages and commercial uses of the isolated gene which is inventive'. In that context, it noted that the purpose of the Bill is to give doctors and researchers unfettered access to biological materials 'as they exist in nature' but that isolated forms of biological material do not exist in nature.[107] Similarly GlaxoSmithKline stressed that isolated genes on their own, with no known utility, are not sufficient for a patent to be granted under the current system.[108]

4.78      Referring to the NRDC case, Mr Matthew Cossey from Croplife Australia noted that there is a need for 'clear parameters, principles and a guiding framework' capable of allowing patent law to 'evolve as technology evolves'. In this regard, he stated that 'for more than half a century...there have been recognition that it is very hard in statute to define to the point of differentiations on a specific level between innovation and discovery'.[109]

Impact on healthcare

4.79      Concerns which were previously expressed during the Senate Community Affairs References Committee's inquiry regarding the potential impact of gene patents on healthcare, medical research and the training and accreditation of healthcare professionals, were repeated in several submissions to the current inquiry.[110] For example, Clinical Associate Professor Judy Kirk, Director of the Familial Cancer Service at Westmead Hospital, emphasised the importance of genetic testing for the treatment of cancer. She was concerned that patenting could cause limitations on the use of the human DNA sequence which may hamper clinical services and stifle ongoing research in this rapidly changing field:

[C]ommercial monopolisation of genes and other biological material has the potential to impact negatively on health outcomes in Australia, by reducing access to diagnostic and therapeutic procedures, stifling research and development and reducing the effectiveness of professional training and development.[111]

4.80      While the Royal College of Pathologists did not support the specific amendments proposed in the Bill, it nonetheless argued:

[Gene patent] [m]onopolies have serious consequences for the training, delivery, quality and reliability for medical testing. They also have the potential to compromise research into better genetic tests...[G]ene patents can and do compromise the equitable delivery of health care. We do not accept that the care of some patients...should be compromised at the whim of a patent holder who may legally restrict a doctor's freedom to make a diagnosis.[112]

4.81      Cancer Voices NSW strongly supported the Bill, based on the likelihood that gene patents will increase healthcare costs and discourage medical research. It noted the important role of genes in the treatment of cancer, and submitted that it did not wish to see 'patent monopolies over human genes, badly limiting needed opportunities in diagnosis, prognosis and treatment of cancer'.[113] Similarly Dr Jennifer Leary, Laboratory Director at the Familial Cancer Service of Westmead Hospital asserted:

A goal of any society must be to strive for equitable access to the healthcare benefits that arise from the unhindered access to genetic and biological information as it is discovered. A patent that restricts access to this information potentially prevents this equity. Use of the discovery in an invented procedure, product, process etc might then be rewarded by patent protection. Any changes to the Patent Act must be in keeping with the advancement of healthcare and medical research for the benefit of all Australians.[114]

4.82      Dr Luigi Palombi argued that the Bill would improve patient access to genetic tests by preventing 'the monopolisation for 20 years (a very significant period of time) of the fundamental raw ingredients of these genetic tests'. Further:

This frees up other scientists and doctors to use these biological materials to make new and inventive medical and scientific products, processes and methods using these materials in laboratories and for clinical use...[T]he Bill enhances access to genetic testing by ensuring that genetic information is not controlled by any one individual, company or organisation.[115]

4.83      Alphapharm, part of generic pharmaceutical company Mylan, argued:

The patenting of biological materials – as found in nature or if modified in ways that produce no material change in function – must not be allowed to continue. The practice threatens to severely inhibit medical and scientific research because the patent monopoly that these kinds of patents provide means that the biological materials are quarantined to the exclusive benefit of the patent holder. Such broad and unjustified patent monopolies reduce innovative competition in the development of new and inventive medicines. More importantly, they will interfere with the right of every Australian citizen to have future access to cost-effective, lifesaving medicines.[116]

4.84      However, the Consumer Health Forum of Australia considered that 'calls to ban the patenting of genes will not improve consumer access to services such as diagnostic tests', and noted that the Bill would not 'prevent patenting of therapeutic methods and non-biological products such as chemotherapy'.[117]

4.85      Others argued that, without patent protection to encourage investment and innovation, new medicines and diagnostic methods may never be developed or made available in Australia. Thus the Bill could have a detrimental effect on healthcare in Australia.[118] For example, DIISR and IP Australia suggested that, if patent protection is not available in Australia for some products developed overseas, 'it is possible the Australian public could not access many important medicines'.[119]

4.86      Similarly, Medicines Australia listed a large number of medicines and vaccines with active ingredients which could be defined as 'biological materials' (extracted overleaf) and noted that 'some half a million Australians were treated using these medicines and vaccines'. Medicines Australia argued:

Had a ban on patents on biological materials been in place ten years ago, Australian patients today would likely not have access to many of the medicines and vaccines listed...These medicines and vaccines would have been ineligible for patent protection, and the companies which developed them would, in many cases, not have sought to market them in Australia.

Passage of this Bill, or a variant of it, would lead to enormous uncertainty around the patent status of many current and future life-saving medicines. This would have serious effects on patient access to medicines in Australia.[120]

4.87      Dr Brendan Shaw for Medicines Australia continued:

Right now, there are over 400 biological medicines in development globally, targeting diseases such as diabetes, cancer, AIDS, arthritis and Alzheimer's. It is uncertain whether these medicines would be eligible for patents in Australia if this bill becomes law. If even part of this global development cycle were threatened as a result of our decisions here, it would be Australian patients who, along with Australian industry, would pay the price. That is, if companies are forced to cease research and development into new products, or even if some of them choose not to bring patented products to Australia for fear of exposing their intellectual property to free riders, Australian patients would have to settle for older, less effective medicines.[121]

Table 1. Extract from Medicines Australia submission.[122]

4.88      A similar point was made by Industry and Investment NSW which argued that the inability to patent certain inventions based on biological materials, such as vaccines and biological therapeutics could be 'a disincentive to companies to provide their new products to the Australian market' and ' may have an impact on the cost and availability of new medicines'. The loss of these newly developed products could also lead to 'a reduction of healthcare standards' and 'reduce economic productivity and capacity associated with advances in human health'.[123]

4.89      Pfizer Australia also commented:

We fear a ban on the patenting of all genetic material and derivatives in Australia would halt commercial development and supply and access to a wide range of innovative medicines and health technologies in Australia...The Bill will reduce research and development in Australia; it will reduce the chances of further medical discoveries particularly in the promising fields of biologics and vaccines; it will reduce Australians' access to new medicines available elsewhere in the world.[124]

4.90      While AusBiotech considered that improved patient access to novel tests and therapies was essential, it did not agree that the Bill would have that effect:

The claimed purpose of the Bill, to deliver free and unfettered access to biological materials, is not sufficient on its own to deliver new medicines and tests to Australians. Arguably the opposite is a more likely outcome with fewer innovative products and technologies reaching the community since the absence of patents for biological materials will be a serious disincentive for foreign and domestic private investors and others interested in commercialising innovation in Australia.[125]

4.91      Roche, the world's largest biotechnology company, stated that, if the Bill were passed, pharmaceutical and biotechnology companies 'would be extremely unlikely to undertake clinical trials in Australia if their medications in development could not be patents here'. Roche noted that, annually, over 18,000 Australians participate in clinical trials which provide them with access to medicines in development.[126]

Impact on investment

4.92      A large number of submissions, mainly from pharmaceutical and biotechnology companies and research institutes, highlighted the potential risks to investment in research and development, and the possible negative impacts on their operations, if the Bill were to be passed.[127] For example, Chemskill described the commercial impact of the Bill on the biotechnology industry as 'devastating':

The removal of the current patent law will undeniably discourage a vast number of businesses to invest at the research point. This will [translate] into job losses for research scientists and a reduction in the number of graduate placements in the scientific sector which our universities so heavily rely on...[W]e will be absolutely and negatively affected by the passing of this Bill in its current form.[128]

4.93      Many submitters and witnesses noted that the development of new products in these areas involve a high level of investment and a high degree of risk.[129] For example, Sanofi Aventis submitted that '[t]he research and development of new medicines, particularly biologic medicines, is a complex, expensive and protracted endeavour, taking over a decade and costing over $1 billion for each successful new medicine'.[130]

4.94      DIISR and IP Australia highlighted that patenting is particularly important for the biotechnology industry:

Biotechnology inventions are expensive to produce, with a high risk of failure and a long time to market, but are comparatively inexpensive to reproduce, or reverse engineer. Current estimates of the full cost of bringing a new pharmaceutical (chemical or biological) entity to market are around US$1.2 to $1.3 billion. Given the high cost of conducting research and development (R&D) before commercialisation, it is crucial for businesses, particularly small start-ups, to attract private investment.[131]

4.95      The intellectual property protection of the patent system was seen as critical to mitigating the risks of developing new products and allowing researchers to attract investment. Medicines Australia explained the important role of patent protection in researching new medicines:

By guaranteeing a clearly defined period of market exclusivity, patents (and other forms of intellectual property rights such as data exclusivity) act to mitigate the extraordinary risk of bringing new medicines to market, making it significantly more likely for private enterprises to continue to invest in research and development.[132]

4.96      Any uncertainty regarding the ability or capacity to secure patents over inventions related to biological materials was perceived as discouraging investment. For example, Mr Johnathon Liddicoat told the committee that Australian medical biotechnology companies have indicated that 'they need strong, unfettered, clear patent protection to raise tens of millions of dollars from investors to take products through rigorous clinical trials'.[133] Professor Dianne Nicol expanded on this point:

[P]atents are often used as a tool to get venture capital and to negotiate with downstream pharmaceutical companies and partners, and they are all looking for robust intellectual property protection. So if there is any uncertainty about the scope of protection then it could well deter investment, deter downstream partnering opportunities.[134]

4.97      The Bill was also perceived as potentially discouraging foreign investment in Australia. CropLife Australia argued that a ban on biological patents would increase the level of disparity between intellectual property law in Australia and in other jurisdictions, and this would 'further stifle foreign investment in Australian biotechnology and reduce, or significantly delay, technology transfer from overseas'.[135] It noted the ALRC Report into gene patents had commented:

Australia's adoption of a position that diverges from the general international consensus would likely have adverse implications for Australia's participation in the global biotechnology market and might adversely affect the extent to which foreign entities participate in, and provide capital investment for, research and commercialisation of genetic materials and technologies in Australia.[136]

4.98      In contrast, comparisons were also made to approaches taken in other countries to patenting human genes and biological material, and the influence of patents on investment. For example, Dr Luigi Palombi noted recent large investments by international companies, such as Amgen and GlaxoSmithKline, in Brazil despite local restrictions on patenting biological materials.[137] Similarly, Professor Drahos stated:

Countries which have moved down the path of regulating gene patents – for example, Brazil – have suffered no adverse impact on investment; to the contrary, investment continues to rise in those countries in the biotech sector.[138]

4.99      However, it was also suggested that there could be other reasons for investments into developing countries, such as Brazil, including the pursuit of market growth in countries which previously may not have been perceived as territories with the highest level of patent protection.[139]

Impact on research and development

4.100         As outlined above, the effect of the Bill on investment was identified as a key impact on research and development in Australia. However a number of other research and development issues were also raised, particularly in relation research and development moving offshore, the impact on specific research and development organisations and the effect on publicly funded research.

4.101         There was significant concern expressed that the Bill may cause investment in research, research companies and researchers to move to jurisdictions with clearer or more stable patent protection. In particular a number of submissions took the view that the amendments in the Bill would inhibit research and investment in pharmaceuticals and biotechnology in Australia, and could potentially cause it to move offshore.[140] The Institute of Patent and Trade Mark Attorneys commented:

Australia risks becoming a pariah (and a backwater) within the international biotechnology community of the developed world... Since research is often conveniently centred where development and investment occur, Australia runs the risk that Australian scientists and their research programs will move overseas to where the patenting and commercialisation becomes centred. We also open ourselves to cherry picking of promising Australian research programs by overseas research institutes, companies and investors.[141]

4.102         Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee noted that the exclusion in the Bill would not prevent patenting of these materials in other jurisdictions. This created a risk that 'Australian innovations in biotechnology will be developed offshore'.[142]

4.103         A number of research and development companies and institutes in Australia highlighted the potential adverse consequences of the Bill for them. These organisations emphasised that patents were considered key assets and the passage of the Bill in its current form 'may have serious consequences for their operations'.[143] For example, the Perth Bone & Tissue Bank noted the significant expenditure on developmental research work that it has undertaken, and stated that, if the Bill prevented several of their pending patent applications, it would mean that clinical studies for their research products would not be financially possible.[144]

4.104         The potential impact of the Bill on publicly funded research was also outlined. A joint submission on behalf of six universities in the Sydney Basin emphasised the link between research funding and patents. The submission noted that university research is increasing reliant on external funding through partnerships with corporate and venture capital entities. The cornerstone of the ability of universities to attract commercial partnerships to increase research funding is through providing tangible value through patents and other intellectual property. In their view, universities benefit from the intellectual property system because patents:

• inform and advance research programs through associated [re]searches;
• provide a vital platform for collaboration with industry;
• enable secure investment and income streams from technology licensing deals, which provide growth in research and rewards for inventors;
• define rights and ownership over materials and inventions, enabling the attraction of funds and world class staff and students;
• support academic career progression; and
• underpin the translation of research innovation.[145]

4.105         Sydnovate, the Technology Transfer Office of the University of Sydney, considered that a broad interpretation of the Bill could negatively affect the patentability of many inventions generated from researchers in their science and medicine faculties. It estimated 25 per cent of the University of Sydney's 221 active patent families could be adversely affected by the proposed change in legislation.[146]

4.106         Others emphasised the large contribution of public funding to research and development activities in Australia and overseas. For example Dr Graeme Suthers from the Royal College of Pathologists noted that a large amount of the funding for research regarding biological materials 'both national and internationally, is coming from the public purse for the benefit of the public'.[147] In this context, Dr Hazel Moir highlighted the lack of reliable data regarding the impact of patents on research and investment:

Despite the overwhelming evidence that patent systems, including that in Australia, largely benefit a fairly small number of foreign firms, there are frequent loud voices from patent owners, and others earning income from patent monopolies, arguing that if any changes are made all industrial innovation and scientific research will cease. There is no substantive evidence for this position – only the subjective views of those benefiting financially from the current system.[148]

Access to products

4.107         Many companies highlighted that the Bill could inhibit the development of new products in Australia. For example, AusBiotech emphasised the important role of private sector investment and partnerships to 'translate' or develop new research and products from 'bench to bedside':

Australia must rely on companies and financiers to take the risks and invest in the commercialisation of novel medicines and diagnostic technologies. This Bill is a tragedy in the making for a 'smart country' like Australia; Australian innovations will be lost as they follow the funding to the US, Europe and Asia. Global pharmaceutical companies may not include Australia in their market launch plans and ultimately Australians will have delayed access to new medicines and tests.[149]

4.108         Similarly, Croplife Australia outlined that it typically took 8-10 years and $80-$100 million to develop a biotech crop trait from the discovery phase to the point where it has received all the regulatory approvals for commercialisation.[150] It emphasised the importance of patent protection (in conjunction with plant breeder rights) to allow developers to recoup the investment made to bring the trait into the marketplace. It stated:

If the Bill were to ban patents on these gene sequences, then there would be nothing stopping a competitor from cross breeding the GM trait into a different variety and claiming plant breeder rights. This process would take one growing season and would completely undermine the original technology provider’s investment. With such a significant "free rider" effect, no company would invest in developing the technology in the first place.[151]

4.109         Grasslanz Technology, an agricultural research and development company, highlighted its considerable investment 'in research and development of endophyte innovations suited to temperate pasture grasses'. It stated that should the Bill pass 'then investments in Australia by Grasslanz Technology in related technologies (endophytes, GMOs, etc) will cease' and new technologies will not be developed and commercialised for Australian industries to use.[152]

4.110         FB Rice & Co referred to research which estimated that the development of a single molecular diagnostic test could cost US$40 million. It commented that if 'genetic diagnostics are not afforded patent protection it is difficult to see who is going to bother developing them'.[153] The Australian Institute of Innovation also argued that restricting the scope of patents is also likely to lead to higher costs for new products:

If constraints are imposed on the investment opportunity set, a response will occur, either in the form of a withdrawal of investment capital generally or a requirement for higher returns on the remaining opportunity set.[154]

Access to knowledge

4.111         Others highlighted that the patent system encourages researchers and companies undertaking research to publish their results in order to claim patent protection.[155] For example, the Garvan Institute of Medical Research had a positive view of the influence of patents on research:

At the Garvan, the existence of patents [has] not at all impeded our research activities. In fact, at times, patents are often considered in a similar light to journal publications in providing access to new information and technology that promotes progress in the research community. It often prevents researchers from "reinventing the wheel" and facilitates most effective use of scarce resources.[156]

4.112         If patent protection for new inventions did not exist, new research could remain undisclosed. For example, SciVentures commented that '[i]f the types of subject matter that can be patented is reduced, then logically one way for a company to protect their investment is to keep the scientific advances [they have made] a secret as long as possible'.[157] The Peter MacCallum Cancer Centre agreed that there is a risk that, without the possibility of patent protection, 'biotechnology and pharmaceutical companies may shift to a model of trade secrets, for which there are no time limits and no statutory limitations'.[158]

Ethical issues

4.113         Ethical issues were often raised by those who supported the Bill, and also by those who were sympathetic to the intent of Bill, but did not support its specific provisions. For example, Ms Elizabeth Gleeson considered the granting of patents for human genes and biological materials to be 'ethically reprehensible', and stated that '[h]uman genes belong to each of us as individuals and have not been invented or manufactured by anyone'. While noting its serious concerns with the provisions of the Bill, the National Health and Medical Research Centre submitted that 'widespread community concern regarding the patenting of naturally occurring gene sequences indicates a need for clarity'.[159]

4.114         Ethical objections to the patenting of human genes and biological materials were expressed in a number of ways. In relation to patenting biological materials,
Mr Craig Patterson stated that 'an imperialist attitude where discovery means ownership...is a philosophy now repudiated in our society'.[160] Similarly, Greenpeace Australia Pacific considered that '[l]iving organisms should not be placed on the same level as human technical inventions'.[161] Dr Luigi Palombi argued that the Bill would prevent 'privatisation of genetic sequence information – information which belongs to humanity and is not the product of human ingenuity but is the product of human evolutionary and natural processes'.[162]

4.115         The Breast Cancer Action Group NSW commented:

As an ethical and philosophical principle, we do not believe that genes as natural parts of the human body should be patentable. We strongly recommend that Australian patent law be amended so that no part of a living thing can be patented.[163]

4.116         However, the Law Council of Australia considered that the ethical issues raised appear to be 'based largely on misconceptions as to the nature of patent protection' and noted that 'the assertion that a patent gives the patentee "ownership" of a gene is incorrect as a matter of law: there is a fundamental distinction between a patent which protects an invention as a form of intellectual property and the physical property in genetic material'.[164]

4.117         The ACIP inquiry into patentable subject-matter also considered the issue of patents on genetic material. It acknowledged the concerns of people regarding patents over 'undesirable, unethical or offensive inventions'. Consequently, ACIP proposed a general exclusion to preclude the patenting of inventions the commercial exploitation of which would be wholly offensive to the ordinary reasonable and fully informed member of the Australian public.[165]

Australia's international obligations and other jurisdictions

4.118         Many submitters held the view that an amendment of the Patents Act to expressly exclude patent protection for biological materials would conflict with Australia's international obligations, particularly the TRIPS Agreement and the AUSFTA. However, others considered that the exclusions in those treaties, or their interpretation, would allow the exclusion for 'biological materials' proposed in the Bill.

4.119         Several submitters and witnesses noted the requirement in Article 27 of the TRIPS Agreement that patent protection should be available 'for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application'. Additionally, they argued that the Bill would be in conflict with the requirement that 'patents shall be available and patent rights enjoyable without discrimination as to...the field of technology'.[166]

4.120         A number of submitters also argued that the exclusion for 'biological materials' in the Bill would not be permitted under the allowed exclusions from patentability in the TRIPS Agreement and the AUSFTA. For example, the International Federation of Intellectual Property Attorneys highlighted that the exclusion for biological materials in the Bill does not fall within the permitted exclusion in the AUSFTA 'to protect ordre public or morality' or 'diagnostic, therapeutic, and surgical methods for the treatment of humans and animals'. Therefore, the exclusion in the Bill would be in violation of the AUSFTA.[167]

4.121         Dr Teresa Schafer, Mr Tim Clark and Mr George Raitt (partners in Piper Alderman) argued:

The introduction of legislation which specifically seeks to restrict the patentability of biotechnological inventions would appear, in the absence of reasons why commercial exploitation is necessary to be prevented to protect ordre public or morality, to be contrary to the TRIPS Agreement and AUSFTA, both of which provide that patents should be available "in all fields of technology".[168]

4.122         However, Professor Peter Drahos considered that the Bill would not breach Australia's treaty obligations. He noted that neither the TRIPS Agreement, or the AUSFTA, define 'invention':

The international framework allows states to exclude subject matter from the meaning of invention. All states take advantage of the open meaning of invention in this framework.[169]

4.123         Professor Drahos also argued that the Bill would not mean Australia was 'out of step with other countries' and listed examples of other jurisdictions which have taken a different approach to the patenting of biological materials.[170] Professor Dianne Nicol, Mr Johnathon Liddicoat, Dr Jane Nielsen and Mr Ben Mee also noted that jurisdictions such as Brazil, Mexico, Argentina and the Andean Community have provisions which prohibit patenting of biological materials, but suggested these exclusions may result from a response to 'the threat of biopiracy'. They suggested that an emerging norm of excluding biological materials from patentability in developing countries 'does not necessarily provide guidance to Australia'.[171] Similarly, the Institute of Patent and Trade Mark Attorneys commented that 'it is not desirable to effectively model the future of the Australian patent system on that of undeveloped or developing countries with entirely different economic and Governmental structures to Australia'.[172]

4.124         Others compared the approach of the Bill to the approaches taken in the United States, Europe, Japan, China and other major trading partners of Australia.[173] DIISR and IP Australia commented that Australia's current position is consistent with most other countries and that presently the United States, China and Japan 'all consider isolated biological material, including gene sequences, to be eligible for patent protection' where the other substantive requirements of patentability are met.[174] Ms Fatima Beattie from IP Australia noted that if the Bill were enacted, Australia would be out of step with patenting activities 'in all the developed and most of the developing countries'.[175]

4.125         Several submitters and witnesses referred to the European Biotechnology Directive which expressly states that biological material which is isolated from its natural environment, or produced by technical processes, may be the subject of a patentable invention even if it previously occurred in nature.[176] Article 5 of that directive clarifies the distinction between invention and discovery in relation to genes and material isolated from humans:

Article 5

1. The human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute patentable inventions.

2. An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.

3. The industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.

4.126         Dr Tania Obranovich from the Institute of Patent and Trade Mark Attorneys argued that, as Europe expressly enshrines the patentability of biological materials, the enactment of the Bill would put Australian patent law 'directly at odds with Europe'.[177]

4.127         Mr Doug Calhoun also commented that the patentability of biological materials, internationally and in Australia, was recognised by the enactment of the Budapest Treaty.[178] The treaty provided for the establishment and maintenance of depositories of cultures of micro-organisations and other biological materials in support of patents. He argued that the consequential amendments to the Patents Act following Australia becoming a signatory to the Budapest Treaty, 'implicitly acknowledged that biological materials are patentable inventions'.[179]

4.128         Those opposed to the Bill often emphasised the importance of maintaining Australian intellectual property rules which are in harmony with international standards and with those of Australia's major trading partners.[180] Bayer CropScience believed that 'the current Bill, by concentrating on "biological materials" almost certainly infringes on Australia's international obligations under TRIPS...and AUSFTA treaties and would reverse decades of work aimed at harmonising Australian and international approaches to patents'.[181] In contrast, the Cancer Council Australia/Clinical Oncological Society of Australia (CCA/COSA) argued that 'Australia is not beholden to any international obligations in relation to domestic gene patent policy; the public interest, particularly public health and access to healthcare, should be the priority'.[182]

Support for the Raising the Bar Bill

4.129         A number of submitters and witnesses recommended that the Bill should be rejected in favour of the Raising the Bar Bill.[183] For example, Medicines Australia stated that the government's proposed legislation is 'likely to clarify and strengthen the conditions required to be met in order for a technology to become patented...[T]his will help ensure the distinction between 'discovery' and 'invention' is clear'. According to Medicines Australia, the Raising the Bar Bill would 'in all likelihood raise the threshold for granting a patent without the adverse unintended consequences' anticipated from possible introduction of the Bill before the committee.[184] Amgen Australia also considered that any concerns regarding access to biological materials for research would be addressed by the amendments in the Raising the Bar Bill 'which contains a statutory provision clarifying researchers' freedom to conduct experiments without infringing patents'.[185]

Support for other policies approaches

4.130         Other policy approaches to address the potential adverse impacts of patents on human genes and biological materials were also highlighted. In particular, many submitters and witnesses preferred policy approaches which were 'technology neutral'.[186] These include: better use of the existing provisions of the Patents Act, such as the 'compulsory licensing' and 'crown use' provisions; an express research exception; and other options canvassed in the ALRC Report, the Senate Community Affairs References Committee report and the ACIP Report.[187] For example, Griffith Hack and Griffith Hack Lawyers stated:

There are alternatives to the proposed Bill, using technology neutral language...[T]hese include the introduction of a provision to exempt patent infringement for experimental use of patented technology and clarification of the Crown Use and compulsory licensing provisions of the Patents Act.[188]

4.131         AusBiotech also argued that the interests and needs of the Australian public can be protected via the safeguard mechanisms that already exist in the law. In relation to the crown use and compulsory licensing provisions of the Patents Act, it commented that while these provisions had never been invoked in relation to healthcare in Australia 'it may be that the spectre of these provisions within the patent system offer a degree of protection to the Australian community from undesirable behaviour in relation to the exercise of patent rights'.[189] However CCA/COSA did not view the Crown use provisions of the Patents Act as an effective mechanism in this regard, as the 'inability or reluctance of jurisdictions to invoke the provisions underscored their limitations as a feasible legal instrument to protect the public interest from gene patent exploitation'.[190]

4.132         Alternative options to address the potential problems created by patents were also raised in evidence. La Trobe University noted that the 'Pharmaceutical Benefits Scheme provides Australia with a robust and flexible mechanism by which the public may gain affordable access to otherwise expensive patented pharmaceutical and biological medication while maintaining a viable pharmaceutical research and development industry'.[191] This reflects the ALRC Report into gene patents in 2004 which recommended that 'options for using government funding and purchasing power to control the cost of goods and services that are subject to gene patents and used in the provision of healthcare' should be examined.[192]

4.133         AusBiotech supported a tribunal-like model or the appointment of a 'Patents Ombudsman' with whom the public, clinicians, researchers and industry could raise grievances.[193] Professor Peter Drahos noted his proposal for patent transparency registers to assist the tracking of granted patents.[194] DIISR and IP Australia also advised that other approaches, such as patent pools, have been used successfully in industries such as software and consumer electronics:

Patent pools can be defined as an agreement between two or more patent owners to license one or more of their patents to one another and/or third parties. The key benefit of patent pools is in reducing transaction costs for users having to identify relevant patents and then seek cross licensing arrangements with multiple individual patent holders.[195]

4.134         Dr Graeme Suthers of the Royal College of Pathologists supported a proposal by the United States Secretary's Advisory Committee on Genetics, Health and Society to create 'a statutory exemption from liability for medical tests that have been developed under a patent'.[196]

4.135         Finally, a number of submissions, such as CCA/COSA, supported both an amendment to the Patents Act to exclude human genes and/or biological materials from patentability (in the case of CCA/COSA with some amendments), along with corresponding implementation of recommendations made in previous public reviews, such as the ALRC Report.[197]

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