Biotech News 21 September 2006

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Allens Biotech News is a fortnightly news service to keep you on top of developments in this fast-moving industry.

Feature article: Patents and experimental use – public consultation paper

In brief: Lawyer Dominic Nguyen provides an update on the proposed introduction of an experimental use exemption in Australia. Since early 2005, Biotech News has been closely monitoring the Advisory Council on Intellectual Property's recommendations regarding patents and experimental use in Australia and, in particular, an amendment to the Patents Act 1990 (Cth) to include an experimental use exemption. IP Australia has now released a public consultation paper on ACIP's recommendations.

(For previous Biotech News articles on this subject, go to Biotech News – March 2005 and Biotech News – November 2005.)


In February 2003, the Advisory Council on Intellectual Property (ACIP) was asked by the former Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Warren Entsch, to:

[E]xamine whether some types of patents are inhibiting research and development in Australia and determine whether both Australian researchers and business would benefit from introducing an experimental use exception provision (or some other provision) into the Australian patent legislation. In examining this question, ACIP should consider whether an experimental use exemption would help researchers more effectively use the patent system to commercialise their research and development.

This was in response, in part, to considerable concern expressed in Australia and overseas that patent rights may be inhibiting research and development. In October 2005, after an extensive consultation period, ACIP released its report Patents and Experimental Use (the ACIP Report). The ACIP Report made five recommendations for reform, including an amendment to the Patents Act 1990 (Cth) to include an experimental use exemption.

In December 2002, the Australian Government had asked the Australian Law Reform Commission (ALRC) to undertake an inquiry into intellectual property issues raised by genetic information. In June 2004, the ALRC released their findings in the ALRC Report 99 entitled Genes and Ingenuity: Genes Patenting and Human Health (the ALRC Report). The ALRC Report made 50 recommendations for reform, including Recommendation 13-1, an amendment to the Patents Act to include an experimental use exemption provision.

The purpose of this latest public consultation paper (the Consultation Paper) is to provide an opportunity for interested parties to make written submissions addressing four specific questions which will assist in developing the Australian Government's response to the ACIP Report. In particular, the Consultation Paper seeks to make specific inquiries regarding differences between the approaches taken by ACIP and the ALRC in recommending an amendment to the Patents Act to include an experimental use exemption provision.

Comparison between ACIP Recommendation 1 and ALRC Recommendation 13-1

Recommendation 1 of the ACIP Report, which recommends the introduction of an experimental use exemption into the Patents Act, states:

The Patents Act be amended to establish the following provision:
  • The rights of a patentee are not infringed by acts done for experimental purposes relating to the subject matter of the invention that do not unreasonably conflict with the normal exploitation of a patent.
  • Acts done for experimental purposes relating to the subject matter of the invention include:
  • determining how the invention works;
  • determining the scope of the invention;
  • determining the validity of the claims;
  • seeking an improvement to the invention.

In contrast, Recommendation 13-1 of the ALRC Report states:

The Commonwealth should amend the Patents Act 1990 (Cth) (Patents Act) to establish an exemption from patent infringement for acts done to study or experiment on the subject matter of a patented invention; for example, to investigate its properties or improve upon it. The amendment should also make it clear that:
  1. the exemption is available only if study or experimentation is the sole or dominant purpose of the act;
  2. the existence of a commercial purpose or objective does not preclude the application of the exemption; and
  3. the exemption does not derogate from any study or experimentation that may otherwise be permitted under the Patents Act'

The Consultation Paper addresses a number of differences between the above two recommendations.

Experimenting 'on' versus 'relating to' the subject matter of the invention

While the ALRC recommends experimentation 'on' an invention, ACIP adopts the wording of many European provisions and applies to experimentation 'relating to the subject matter' of an invention. Although the ALRC considered the wording of the European provisions, it was rejected on the basis of the uncertainty in Europe about the effect of commercial intention on the availability of the exemption. In contrast, ACIP's main concern with the 'experimentation on an invention' approach was that there is a wide range of acts that could fall within its scope. ACIP considers that its approach is preferable because:

  • it is more likely to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement);
  • it is in harmony with European provisions, and so reduces complexity for users;
  • it provides scope for decisions to be made that reflect the overall intent of the legislation rather than the meaning of an exact word; and
  • certainty is better achieved by providing the courts with a list of inclusive acts.
Dominant purpose

The ALRC recommendation states that the exemption is available only if study or experimentation is the sole or dominant purpose. However, ACIP expressed concern that proving what the 'dominant purpose' of the Act was, could be difficult as it would involve determining the intent of the alleged infringer, where such documentary evidence could be manufactured.


The ALRC considers that a good starting point is that study or experimentation for the purpose of improving, further developing, or testing should be covered. In comparison, ACIP considers that use of the term 'study' adds insufficient benefit to change from the European word 'experimental', which pertains more to seeking to discover the unknown and the testing of principles.

Commercial purpose

The ALRC recommendation states that the existence of a 'commercial purpose or objective' does not preclude the application of the exception. The ALRC contemplates that some commercially orientated research could fall outside the scope of the exemption. ACIP evaluated the ALRC recommendation, but considers the term 'commercial purpose' has the potential for a wide range of interpretations.

Inclusive list of experimental acts

The ALRC did not consider it necessary to include an exclusive list of experimental acts, stating that:

It is not a simple matter to describe what kinds of experimental uses of genetic materials or technologies should be regarded as involving experimentation on a patented invention, and therefore protected by an experimental use exemption.

In contrast, ACIP took a different approach by providing an inclusive list of experimental acts. The rationale was to give the courts guidance on the meaning of the European-style provision by providing a genre of experimental acts to work from.

Public consultation process

IP Australia is seeking written submission specifically addressing the following questions:

  1. How effective and appropriate do you think recommendation 1 of the ACIP Report would be if introduced?
  2. How effective and appropriate do you think recommendation 13-1 of the ALRC Report would be if introduced?
  3. If ACIP recommendation 1 was accepted, what, if any, changes should be made to the list of acts done for experimental purposes relating to the subject matter of the invention?
  4. Has your industry been impacted by the absence of an exception from infringement for activities undertaken prior to the end of the initial patent term relating to obtaining regulatory approval? If so, please provide details.

The closing date for written submissions is 29 September 2006. A copy of the Consultation Paper is available on the IP Australia website at

Company news

In brief: Regular news from the biotech industry.

AstraZeneca and Schering AG collaborate to develop breast cancer drug

15 September – AstraZeneca and Schering AG have formed a new alliance to co-develop and jointly commercialise Schering AG's novel selective estrogen receptor downregulator (SERD) to treat breast cancer. Development of agents that selectively down regulate the estrogen receptor is an important advance in the treatment of breast cancer as the novel SERD has the potential to offer a specific targeted therapy approach for women with breast cancer. AstraZeneca will lead the clinical development, while Schering AG will lead the non-clinical, process development and manufacturing activities. All development and commercialisation costs and global profits will be shared equally. Financial terms of the deal were not disclosed.

[Source: Company Announcement]

Bionomics collaborator advances new treatment for MS

14 September – Australian company Bionomics announced that, according to data presented by a collaborator Dr Andrew Harvey of the Walter and Eliza Hall institute of Medical Research (WEHI), compounds that the company is developing has shown to be effective in an animal model of inflammation. In a presentation at the American Chemical Society's annual meeting in San Francisco, Dr Harvey showed that blockers of the Kv1.3 ion channel are effective in animal models that mimic inflammatory diseases such as Multiple Sclerosis (MS). Current treatments for MS are characterised with significant side-effects because the action of current drugs upon disease is indirect. However, this new therapy has the potential to specifically block the activity of cells that trigger the disease. It is hoped that the new Bionomics compound can be developed into an oral therapy as opposed to the currently available injectable treatment options. Bionomics and WEHI are collaborating with the object of conducting first human trials in 2009.

[Source: Company Announcement]

BMS and Medivir AB collaborate to develop MIV-170

9 September – Bristol-Myers Squibb (BMS) and Medivir AM announced a worldwide collaboration to develop and commercialises MIV-170 as a treatment for HIV-1 infection in adults as part of an antiretroviral drug regimen. MIV-170 is a preclinical non-nucleoside reverse transcriptase inhibitor (NNRTI). BMS has paid an upfront payment of US$7.5 million to Medivir, who also stand to earn up to US$97 million in development and milestone payments. BMS will be responsible for the worldwide development and commercialisation for all countries, except the Nordic region. According to BMS Chief Scientific Officer, Elliott Sigal, 'this collaboration is strongly aligned with BMS's strategy of focussing on therapies addressing areas of serious medical need.'

[Source: Company Announcement]

Drug could prevent Type 2 Diabetes in high risk individuals

15 September – The largest diabetes-prevention trial ever conducted has shown that GlaxoSmithKline's (GSK) drug Avandia® (rosiglitazone meleate), in conjunction with standard counselling on healthy eating and exercise, reduced the risk of developing type 2 diabetes by 62 per cent relative to placebo among high-risk individuals. Type 2 diabetes develops when people cannot produce enough of the hormone insulin or when the insulin produced does not work properly, leading to an inability for the body to utilise glucose in the normal way. The DREAM trial evaluated the likelihood of progression to type 2 diabetes over a three-year median follow-up period among 5269 people who already had higher than normal blood sugar levels (pre-diabetes). Rosiglitazone is an approved treatment for type 2 diabetes. No drug is currently approved for the treatment of pre-diabetes.

[Source: Company Announcement]

European Commission expands indication for Plavix®

7 September – Sanofi-Aventis and Bristol-Myers Squibb announced that the European Commission (EC) has granted a new indication for the antiplatelet agent PLAVIX® to include the most severe type of heart attack, ST-segment Elevation acute Myocardial Infarction (STEMI). STEMI is usually characterised by the artery supplying the heart with blood being generally blocked completely by clot formation in the coronary arteries, which is associated with an underlying disease known as anterothrombosis. PLAVIX® acts by keeping platelets in the blood from sticking together and forming clots and was previously approved for early and long-term risk reduction in patients at risk for atherothmbotic events. The new indication is based on the findings of two clinical trials that treated patients who had STEMI with PLAVIX® administered on a background of standard therapy. The United States Food and Drug Administration approved PLAVIX® for STEMI in August 2006.

[Source: Company Announcement]

Lipitor® patent upheld in the Netherlands

13 September – Pfizer Inc. announced that the District Court of The Hague in the Netherlands has ruled that the basic patent covering atorvastatin would be infringed by a competitor product from generics manufacturer Ranbaxy. Atorvastatin is the active ingredient in Pfizer's blockbuster drug Lipitor®. This decision prevents Ranbaxy from launching its drug until the patent expires in November 2011.

[Source: Company Announcement]

Orlistat provides significant weight loss and multiple health benefits

7 September – The International Congress on Obesity, currently sitting in Sydney, has heard that low dose orlistat (60 mg) combined with a reduced-calorie diet provides meaningful weight loss and improves cholesterol and blood pressure levels in overweight and obese individuals. These results were derived from three double-blind, placebo-controlled clinical studies of 1729 subjects, which compared Orlistat and diet to diet alone. Orlistat is onwed by GlaxoSmithKline (GSK) and acts by preventing the absorption of approximately 25 per cent of fat consumed. The drug is currently under review by the United States Food and Drug Administration. If approved it will become the only FDA-approved weight loss medication available over the counter. GSK consumer healthcare proposes to market Orlistat under the brand name alli™.

[Source: Company Announcement]

Polartechnics acquires breakthrough cervical cancer screening patents

13 September – ASX-listed Polartechnics Ltd announced it has reached agreement to purchase a group of internationally-applicable patents for methods of detecting human papillomavirus (HPV) from Biosearch International Pty Ltd. Persistent infection with high-risk HPV types is now accepted as the cause of cervical cancer in women. According to Executive Chairman of Polartechnics Robert Hunter, the potential for HPV screening is enormous given its favourable comparison with the existing pap smear screening, which has a high false negative rate and so has to be repeated at frequent intervals. Results from large trials in Europe and North America attest to the efficacy and greater sensitivity of HPV testing as a primary cervical screening method. Subject to shareholder approval, Biosearch will receive 1.5 million fully paid shares in Polartechnics at AU$0.14/share as consideration.

[Source: Company Announcement]

Stem Cell Sciences to participate in human embryonic stem cell consortium

30 August – Stem Cell Sciences (SCS) announced that it will participate in the European Commission approved 'ESTOOLS' programme. This is a €12 million stem cell research program involving both academic and commercial researchers. SCS is one of three commercial partners taking part in this initiative, which is being led by the University of Sheffield. SCS plans to use any discoveries from the program to supply improved cell-based drug screening toxicology options to the pharmaceutical and biotechnology industries. The overall goal of ESTOOLS is to develop the tools and biological understanding required to control expansion, lineage commitment and terminal differentiation of human embryonic stem cells for bio-industrial and medical applications.

[Source: Company Announcement]

Tumour suppressor patent granted

11 September – ASX-listed BioPharmacia announced that its HLS5 cancer gene project undertaken in collaboration with the University of Western Australia and Western Australian Institute for Medical Research (WAIMR) has been granted a new Australian patent called Tumour Suppressor Factor. Results released in 2006 demonstrated that HLS5 has a role in regulation of gene expression in diseases such as cancer, Huntington's disease and AIDS. The patent enables BioPharmacia to move the HLS5 project further through the commercialisation process.

[Source: Company Announcement]

BioTip: Do not budget in a vacuum

An essential part of building and managing an IP portfolio is to adequately budget for associated costs. It can take many years to obtain granted patents for an invention in the countries of interest and costs often escalate over the IP protection process. Furthermore, where active steps are being taken to commercialise an invention or strengthen a brand, the budget should accommodate, among other things, legal costs associated with transactional arrangements and freedom to operate investigations. The budget should also anticipate unexpected developments, including protection of new IP. All of these (and other) costs can be difficult to estimate, particularly without professional input. Assisting with preparation of an IP budget should be an important part of an attorney's practice. Allens Arthur Robinson recommends that entities seek professional assistance from their IP advisers when preparing or reviewing their IP budget.


Information on the latest conferences

See conferences in: September | October


ClubBio2006: 'Breaking the Barriers'
Thursday 21 September – Friday 22 September
Hyatt Regency Resort, Sanctuary Cove
Gold Coast, Queensland

Biomarkers Summit
Tuesday 26 – Wednesday 27 September
Prague, Czech Republic


Australasian Clinical Research: Collaborating to do it Right
Monday 23 – Wednesday 25 October
Mercure Hotel
Brisbane, Australia

NEW – Agricultural Biotechnology – 'Dinner Time: What's Cooking and Who's Got The Recipe?'
Wednesday 4 October
Innovation Centre
Western Australia, Australia

NEW – Finance for Growth – Balance Sheet Ready Program
Thursday 5 October
Melbourne, Australia

For further information, please contact:

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