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Genes and Ingenuity: Gene Patenting and Human Health (ALRC 99)

In brief: Allens Lawyer Alexia Mayer and Allens PTA Partner Dr Trevor Davies provide an overview of the Australian Law Reform Commission's report, Genes and Ingenuity: Gene Patenting and Human Health (the Report).

Background

Previous editions of Biotech News have followed the progress of the Australian Law Reform Commission's (ALRC) assessment of whether the Australian patent system meets the challenges of the rapidly developing science associated with genetic materials and technologies. The Final Report was tabled in Parliament on 31 August 2004.

The ALRC has concluded that although the Australian patent system is not in need of fundamental transformation, significant changes are necessary to accommodate developments in genetic technology.

Initiated in December 2002 by the then Federal Attorney General, Darryl Williams, the purpose of the Inquiry was to consider the impact of current patenting laws and practices related to genes and genetic and related technologies on:

  • research and its subsequent application and commercialisation;
  • the Australian biotechnology sector; and
  • the cost-effective provision of healthcare in Australia.

The ALRC was also required to consider what changes, if any, are necessary to address any problems identified in current laws and practices, with the aim of encouraging the creation and use of intellectual property to further the health and economic benefits of genetic research and genetic and related technologies.

During the preparation of the Report, the Inquiry undertook an extensive community consultation process, including the release of an Issues Paper, IP 27, and a Discussion Paper, Discussion Paper 68, reported previously in Biotech News. In total, 119 written submissions were received by the Inquiry in response to the two papers.

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Recommendations

The ALRC made 50 recommendations for reform to the Australian patent system, with a view to:

  • improving patent law and practice concerning the patenting of genetic materials and technologies;
  • improving patent law and practice concerning the exploitation of gene patents;
  • ensuring that publicly funded research, where commercialised, results in appropriate public benefits;
  • encouraging universities and other research organisation to raise the awareness of researchers about patenting issues and the commercialisation of research;
  • ensuring that Australian research organisations and biotechnology companies are adequately skilled to deal with issues concerning commercialisation and the licensing of patented inventions;
  • establishing mechanisms for monitoring the implications of gene patents for research and healthcare so that Governments have the ability to intervene where gene patents are considered to have an adverse impact, either in specific cases or systematically;
  • clarifying the application of competition law to the exploitation of intellectual property rights, including patented genetic material and technologies; and
  • clarifying the scope and practical application of exceptions to copyright infringement in relation to research.

Some of the more significant recommendations are discussed below.

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General criteria for patentability should continue to apply

The ALRC has steered away from radical reform of the patent system. In particular, the ALRC found that:

  • patent applications relating to genetic material and technologies should be assessed according to the same legislative criteria for patentability which apply to patent applications generally;
  • the Patents Act 1990 (Cth) (the Act) should not be amended to exclude genetic materials and technologies or methods of diagnostic, therapeutic or surgical treatment from patentable subject matter; and
  • the existing circumstances in which social and economic considerations may be taken into account in decisions about granting patents should not be expanded, on the basis that such considerations should be addressed primarily through direct regulation of the use or exploitation of a patented invention.

In rejecting submissions in favour of the contrary view, the ALRC took into account the long history of patenting inventions relating to genetic materials and technologies in Australia and overseas, Australia's international treaty obligations and a biotechnology industry dependent on patents and inventions.

However, the ALRC did recommend that the responsible Minister initiate an independent review of the appropriateness and adequacy of the 'manner of manufacture' test as the threshold requirement for patentable subject matter under Australian law, with a particular focus on the requirement that an invention must not be 'generally inconvenient'.

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Taking advantage of existing legal avenues

Rather than major reform to the patent system itself, the ALRC has recommended that more use be made of existing legal avenues for redressing unfair exploitation of gene patents or the adverse impact of such patents on the medical research, including by advocating a more pro-active role for Government.

The ALRC recommended that where particular gene patent applications, granted patents or patent licensing practices are considered to have an adverse impact on medical research, Government health departments should consider whether to exercise any existing legal options to facilitate access to the inventions. These options include:

  • challenging a patent application or granted patent by initiating proceedings to oppose a patent application, requesting re-examination of a patent, or applying for revocation of a patent;
  • making a complaint to the Australian Competition and Consumer Commission (ACCC) where evidence arises of a potential breach of the competition provisions of the Trade Practices Act 1974 (Cth) (TPA);
  • exploiting or acquiring a patent under the Crown use and acquisition provisions of the Act; or
  • applying for the grant of a compulsory licence under the Act.

It is also recommended that the Department of Human Health and Ageing develop a policy regarding the circumstances in which it may be appropriate for the Commonwealth to acquire a patent for the purposes of promoting human health.

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Changes to compulsory licensing

The rarely used compulsory licence provisions of the Act are designed to enable a person who has tried for a reasonable period without success to obtain a patent licence on reasonable terms and conditions. A licence may only be granted where the reasonable requirements of the public with respect to the invention are not being satisfied and the patentee has given no satisfactory reason for failing to exploit the patent.

If the ALRC's recommendations regarding compulsory licensing are accepted, the competition-based test recommended by the Intellectual Property and Competition Review Committee would be added as an additional basis for seeking a compulsory licence under the Act. Given the unique nature of many inventions relating to genetic materials and technologies, and the subsequent difficulties in substitution, the ALRC considered that the anti-competitive exploitation of a patent could have significant implications for downstream research or access to certain healthcare services.

The scope of the 'reasonable requirements of the public test' would also be clarified. This test has been regarded as imprecise and difficult to apply.

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Changes to the Crown use provisions

The ALRC recommends amendments to the Crown use provisions. In the ALRC's view, the Act should be amended to clarify that, for the purposes of the Crown use provisions, an invention is exploited 'for the services of the Commonwealth or of a State' if the exploitation of the invention by a Commonwealth or State authority (or other authorised person) is for the provision of healthcare services or products to members of the public. The ALRC also recommends amending the Act to provide that, when a patent is exploited under the Crown use provisions, the remuneration that is to be paid by the relevant authority must be paid promptly and must be just and reasonable having regard to the economic value of the use. Similarly, the ALRC recommends that the Act be amended to provide that, when a patent is acquired under the Crown acquisition provisions, compensation must be paid promptly and must be just and reasonable having regard to the economic value of the patent.

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Creating an exception for experimental use

A key issue for the Inquiry was whether to recommend a statutory exemption for research or experimentation. The Act does not include an express exemption for experimental or research use of patented inventions from liability for infringement, and there is currently considerable legal uncertainty about the existence and scope of any implied experimental use defence to patent infringement in Australia.

In considering whether to recommend the introduction of an express exemption, it was necessary for the ALRC to weigh up competing policy considerations of how best to encourage innovation. Concerns were raised that a statutory exemption for research use could erode incentives to develop new products, because the outcome of research would have little economic value. The ALRC also had to consider concerns regarding the time and cost of negotiating licences and the impact this could have on further research and development.

The ALRC concluded that the Act should be amended to create an exemption from patent infringement for acts done to study or experiment on the subject matter of a patented invention (eg, to investigate its properties or improve it). This exemption would apply to all patented subject matter, not just gene patents. The proposed exemption does not cover all research in which a patented invention is exploited. Rather, it is limited to protecting experimental use on the subject matter of a patented invention, ie. research focussed on discovering more about the invention and its properties.

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Usefulness

The ALRC considered that the issue of gene patenting highlights problems concerning the manner in which the usefulness of an invention is assessed in Australia. The ALRC recommended specific reforms to increase the burden of proof on applicants and require that 'usefulness' be assessed during the examination of an application for a standard patent. 'Usefulness' would be satisfied only if the patent application discloses a specific, substantial and credible use. Under the proposal, the Commissioner of Patents would need to be satisfied of usefulness on the balance of probabilities.

The ALRC has also recommended including 'lack of usefulness' as a basis for opposing an application for a standard patent, in addition to its current role as a ground for revocation. In fact, this ground of opposition has already been added to the Act by the US Free Trade Agreement Implementation Act 2004 (Cth).

The Report recommends that IP Australia develop guidelines to assist patent examiners in applying the revised usefulness requirement.

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Patent Office practice

IP Australia's ability to deal with patent applications involving genetic materials and technologies was also addressed by the ALRC. The ALRC recommendations included improvements to education and training of patent examiners, developing examination guidelines specific to genetic materials and technologies, and amending the Act to require patent examiners to be satisfied on the 'balance of probabilities' when assessing the requirements for patentability.

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Ensuring publicly funded research leads to a public benefit

The ALRC recommended that the Australian Research Council (ARC) and the National Health and Medical Research Council (NHMRC) should take various actions to ensure that publicly funded research, where commercialised, results in appropriate public benefit. In particular, the ALRC has recommended that:

  • the National Principles of Intellectual Property Management for Publicly Funded Research (National Principles) be reviewed. Where appropriate, conditions such as requiring that research be placed in the public domain, or that patented inventions be widely licensed, should be attached to grants of funding for genetic research;
  • guidelines be developed to assist organisations receiving public funding in complying with the National Principles; and
  • in exceptional circumstances, where the public benefit would clearly be served by broad dissemination of the results of publicly funded research, the ARC and NHMRC consider making a grant for funding conditional (eg, by including a requirement that research results be placed in the public domain, or that a patented invention be widely licensed).

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Amendments to other Acts

The ALRC has recommended that the Copyright Act 1968 (Cth) should be amended to provide that research with a commercial purpose or objective is 'research' in the context of fair dealing for the purpose of research or study, and that, in relation to databases protected by copyright, the operation of the fair dealing for research or study provisions cannot be excluded or modified by contract.

The ALRC also considers that the TPA should be amended to clarify the relationship between competition law and intellectual property rights.

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