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Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

Author: Dianne Nicol and John Liddicoat EAP Date (approved for print): 3/12/2012 DOI: 10.5778/JLIS.2012.22.Nicol.1

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Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?
The question of whether or not genes should be eligible for patent protection continues to be a cause of significant tension around the world in academic, policy and commercial contexts, as well as in the media and other public forums, for wide-ranging reasons. The primary focus of this paper is an analysis of a recent attempt in Australia to use legislative means to exclude from patent eligibility isolated nucleotide 1 and polypeptide 2 sequences (collectively isolated sequences 3 ) that are similar to those that exist in nature.4 In parallel, challenges to the patent eligibility of isolated sequences are also currently before the courts in Australia and the United States (US).5 These

PhD (Biology), LLM, Professor, Centre for Law and Genetics, Law Faculty, University of Tasmania BSc, LLB (Hons), Research Fellow, Centre for Law and Genetics, Law Faculty, University of Tasmania The US National Library of Medicine defines a nucleotide as [a] molecule consisting of a nitrogenous base (adenine, guanine, thymine, or cytosine in DNA; adenine, guanine, uracil, or cytosine in RNA), a phosphate group, and a sugar (deoxyribose in DNA; ribose in RNA). DNA and RNA are polymers of many nucleotides: US National Library of Medicine, Nucleotide (19 November 2012) Genetics Home Reference <>. The US National Library of Medicine provides the following definition of peptides and polypeptides, A peptide is one or more amino acids linked by chemical bonds. The term also refers to the type of chemical bond that joins the amino acids together. A series of linked amino acids is a polypeptide. The cells proteins are made from one or more polypeptides: US National Library of Medicine, Peptide (19 November 2012) Genetics Home Reference <>. In many instances in this article it is convenient to refer to isolated sequence patents as those that refer to both polypeptide and nucleotide sequences. At other times it is not and in these instances specific references will be made to them as nucleotide or polypeptide sequences where appropriate. The Patent Amendment (Human Genes and Biological Materials) Bill 2010. As discussed below, this Bill not only attempted to exclude isolated sequences, but other types of biological materials as well. The Australian case is Cancer Voices v Myriad Genetics Inc Federal Court of Australia, New South Wales Registry NSD643/2010, which was heard in February 2012 but not decided at the time of writing. The US Supreme Court granted


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challenges focus on the interpretation of the general subject matter requirement in patent law by the courts. The judicial decisions to date are considered in more detail in other articles in this special issue.6 Although the cases are continuing through the court hierarchies at the time of writing, the final decisions are likely to provide some guidance on the limits of patent eligibility, both specifically, in respect of isolated sequences, and more generally, for all potentially patentable subject matter.7 In this regard, they may ultimately provide some resolution to the question of whether or not patent law should embrace subject matter like isolated sequences. Whether or not these judicial decisions will resolve any of the problems ostensibly created by having allowed such patents in the past is another matter entirely, and this remains open to debate. The argument made in this article has a different focus: whether it is feasible and helpful to create a specific legislative exclusion from patent eligibility for isolated sequences, using the recent experience in Australia as a case study. Tomes of writings have been compiled on the subject of excluding isolated sequences from patent eligibility, but few changes to patent law have resulted, and perhaps few ever will. What the analysis in this paper is intended to illustrate is that attempts to effect technology-specific legislative change may simply be too hard. In areas of rapidly developing technology, it is difficult to predict in advance the commercial viability of the many ingenious ideas that emerge on a regular basis. The seemingly impossible challenge is to delineate the boundaries of patent eligibility with sufficient clarity so as to remove perceived fetters on innovation without creating additional fetters, now or in the future. Without patents over foundational technological developments, there is the risk that the incentives that the patent system provides will be lost. This is particularly significant in the field of human genetics and genomics, because translation from scientific

certiorari in the case of Association for Molecular Pathology v United States Patent and Trademark Office on 30 November 2012.

Rochelle Cooper Dreyfuss, Implications of the DNA Patenting Dispute: A US Response to Dianne Nicol (2012) 22(1) Journal of Law, Information and Science, and Ben Mee, A Judicial Axe for Sharp Drafting: The Natural Phenomenon Dilemma (2012) 22(1) Journal of Law, Information and Science. To illustrate just how tortuous the process of navigating through the court hierarchies can be, in the US a challenge to Myriad Genetics, Incs patents claiming rights to isolated sequences and methods associated with hereditary forms of breast cancer was made in 2010 in Association for Molecular Pathology v United States Patent and Trademark Office (AMP). Since that time, an application by the plaintiff for summary judgment has been decided by the District Court: AMP, 2010 US Dist LEXIS 35418 (SD NY Apr 2, 2010). An appeal from that decision as then decided by the Court of Appeals for the Federal Circuit: AMP, 653 F 3d 1329 (2011). The US Supreme Court granted applications for certiorari from both parties, only to remit the case back to the Federal Circuit for rehearing. The second decision of the Federal Circuit was handed down in August 2012: AMP, 689 F 3d 1303 (2012). As noted above n 5, the US Supreme Court has now granted certiorari to hear the final appeal from this decision. See AMP, 2012 WL 4508118 (US), 81 USLW 3199 (30 November 2012).


Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

discovery into the clinic and the pharmacy requires investment of hundreds of millions to billions of dollars. But it should to be forgotten that there is another equally compelling side to this argument: if patent protection in areas such as this is too broad, follow-on innovation could be deterred. Patent law clearly needs to be subjected to regular scrutiny to ensure that it is meeting its stated goals, but it is argued here that a cautious approach should be taken to reform. Crucial requirements might include: a sound evidence-base justifying the need for reform; precision of wording of amending legislation to ensure that it does not result in increased uncertainty; and confidence that the benefits of proposed amendments on innovation clearly outweigh negative consequences. Part 1 of this article gives a brief perspective on some of the relevant scientific, legal and commercial factors that have, over time, led to the general proposition that isolated sequences are patent eligible. Part 2 articulates some of the key current tensions surrounding isolated sequence patents in the context of legislative reform and current and emerging technology. Part 3 critiques the attempt to change Australian patent legislation to exclude isolated sequences from patentability. The article concludes that attempts to legislate to exclude isolated sequences from patenting may be destined to fail because they are simply too difficult to achieve in practice, and even if they were achievable, they have doubtful utility.

How Did Isolated Sequences Become Patent Eligible? Scientific, Commercial and Legal Perspectives

1.1 Early developments

The birth of the biotechnology industry through companies such as Genentech, Inc in the 1970s, documented in Nicols earlier article,8 bought with it new patent claims to controversial subject matter. Building upon the ground-breaking work of many scientists, in particular Stanley Cohen and Herbert Boyer (recombinant DNA), and Frederick Sanger (dideoxy chaintermination sequencing, commonly known as Sanger sequencing), isolated nucleotides, isolated polypeptides, related constructs and related techniques were all claimed in patents. Prior to the 1970s, the dominant drug development paradigms were to extract and purify naturally occurring large molecules and to screen (usually in mice) artificially developed small molecules and isolated, naturally occurring small molecules.9 The concept of artificially producing nucleotides or polypeptides to create drugs was only theoretical at the time. Then, in 1982, Genentech,

Dianne Nicol, Implications of DNA Patenting: Reviewing the Evidence (2011) 21(1) Journal of Law, Information and Science 7. David J Newman, Gordon M Cragg, and Kenneth M Snader, Natural Products as Sources of New Drugs over the Period 1981-2002 (2003) 66 Journal of Natural Products 1022.


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together with Eli Lilly, received clearance from the US Food and Drug Administration to market its biosynthetic insulin.10 This was a remarkable achievement because prior to this insulin had been harvested from cows and pigs and this carried with it a range of potential problems associated with transmission of disease, non-human effects and limited supply.11 Synthetically produced human insulin was the first recombinant protein produced for therapeutic purposes. No claim to an isolated sequence was made in the insulin-associated patents,12 but a few years later in Genentechs patent for human tissue plasminogen activation factor (TPA, a treatment for acute cardiovascular disease), a claim to the isolated sequence encoding TPA was made. 13 Such claims to isolated nucleotide sequences were new. 14 However, an assessment of leading US patent subject matter cases, particularly the much earlier case of Merck v Olin Mathieson,15 goes some way to explaining why, at that time, isolated sequences were considered patentable. The subject matter in Merck v Olin Mathieson was vitamin B12. Although the patent included both product and process claims, only the product claims were relevant in the case before the Court of Appeals of the Federal Circuit. Olin Mathieson challenged the validity of the patent and the District Court held that the product claims were invalid on the grounds that they covered a product of nature and that there was lack of invention.16 However, the Federal Circuit, in reaching the conclusion that the product claims were patent eligible, stated that [t]he fact that a new and useful product is the result of processes of extraction, concentration and purification of natural materials does not defeat its patentability.17 As such, if a new product differs from the old in kind, but not by degree, it will be patent eligible.18


For a brief commentary at the time of approval see, Biotech Comes to the Drugstore, Time (New York), 15 November 1982. Maureen McKelvey, Evolutionary Innovations: The Business of Biotechnology (Oxford University Press, 1996) 128-129. However a claim was made to A recombinant microbial cloning vehicle (plasmid) wherein the polypeptide encoded by said structural gene is the A chain of human insulin, see US patent 4,356,270. Claim 1, US patent 4,766,075. For a more thorough, but non-exhaustive review of early isolated nucleotide patent claims see, Eric J Rogers, Can You Patent Genes? Yes and No (2011) 93 Journal of the Patent and Trademark Office Society 19, 27-28. Merck & Co, Inc v Olin Mathieson Chemical Corp, 253 F 2d 156 (4th Cir, 1958). Merck & Co, Inc v Olin Mathieson Chemical Corp, 152 F Supp 690, 694-695 (D VA, 1957). Merck & Co, Inc v Olin Mathieson Chemical Corp, 253 F 2d 156, 163 (4th Cir, 1958). Ibid 162.



13 14

15 16

17 18


Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

The vitamin B12 claimed in this case was a chemically treated and purified fermentation product of Streptomyces griseus. The resultant B12 had in kind superiority to the two other natural forms of B12 on both functional and chemical levels. The vitamin B12 composition isolated from liver in cattle carried significant side effects and the untreated B12 in the fermentation product from Streptomyces griseus had no therapeutic utility.19 By analogy, when nucleotides are isolated and used in the development of drugs, they also have functional and chemical differences when compared with equivalent nucleotides that remain in situ. For example, isolated nucleotides are not wrapped in proteins (which in their natural state composes 50% of their mass), covalent bonds are broken and they are no longer part of a chromosome. Moreover, any isolated sequence will likely be without enhancers, repressors, methylation sites and other aspects that are required for it to perform its function in a cell. 20 Similarly, on a purely functional level, by isolating the nucleotide sequence it can be artificially stored, transported, subjected to numerous tests, inserted into vectors, sequenced using cheap reliable methods and more easily replicated. All these factors would have led to a presumption by many patent offices, patent attorneys and patent claimants in the 1980s and beyond, that isolated sequences, like isolated compounds from biological entities such as vitamin B12, were patentable.21 Thus, it becomes understandable how the situation arose that patents started to be granted for isolated sequences in the 1980s. Absent court challenges or legislative change, there was no obvious reason for patent offices to change this practice once it had commenced.

1.2 Modern development of drugs

In modern times, the discovery and development of a new drug is estimated to cost hundreds of millions of dollars, and is rising rapidly, at a rate of around seven per cent per year.22 Moreover, the evidence suggests that as candidate drugs progress through rigorous clinical trials, it is clear that most will fail.23 As a result, it is understandable why broad and robust market protection is sought by the companies developing these drugs, so that when a product finally does reach the market, free-riders can be stopped and profits from sales can be secured. Pharmaceutical firms generally use drug patents to achieve this protection. Although some drugs may be able to make it to

19 20 21 22

Ibid 164. For a more thorough legal biochemical analysis see, Rogers, above n 14, 23-25. Ibid 39-40. Frederick M Scherer, R&D Costs and Productivity in Biopharmaceuticals (2011) Harvard Kennedy School, Faculty Research Working Paper Series <>. In a recent review it was found that those that make it to phase two have 18 per cent chance of success: John Arrowsmith, Trial Watch: Phase II Failures: 20082010 (2011) 10 Nature Reviews Drug Discovery 328, 328.



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market without patent protection, these are likely to be considered the exception rather than the rule.24 Most biotechnology firms are in a different position in the drug development pipeline when compared with pharmaceutical firms, because they lack the capacity to undertake development, manufacturing and marketing. They need patent protection upstream of the market-ready product to give them the bargaining power to enter into licence agreements with downstream partners. Moreover, they need patents to secure funding from venture capitalists and other investors. Evidence shows that it can be difficult, if not impossible for them to secure funding to carry out even the most early stage drug discovery without patents. 25 For example, a 2004 study found that biotechnology firms with more patents were likely to receive more venture capital financing, particularly if the patents were recent.26 Thus, it seems that without upstream patents, new ways will have to be found to support early stage drug discovery. Government funding is one option, and public-private partnerships are also being considered.27 However, it is presently unclear whether these alternatives can ever fully replace the contribution made by biotechnology firms to the pipeline for new drugs. This argument in favour of upstream patents does not address the question of whether biotechnology firms need isolated sequence patents. Would other upstream patents for methods of using sequences and for products created from sequences suffice? When an invention necessitates the use of a specific isolated sequence, it is logical, from a purely commercial perspective, that an isolated sequence claim is made because it confers the broadest possible patent rights. But an alternative perspective is that broad patents of this nature are not needed because claims to other products and to methods in the drug development pipeline provide adequate incentive. Moreover, because of their breadth, there is a risk that isolated sequence claims could stifle otherwise legitimate follow-on innovation. The logical conclusion that flows from this argument is that unless isolated sequence claims can be shown to be essential to facilitate innovation, they should made patent ineligible. However, one flaw in this argument is that there is no clear evidence that they


Note, however, the argument made by Michele Bodrin and David Levine that questions the essentiality of patents for the pharmaceutical industry: Michele Bodrin and David K Levine, Against Intellectual Monopoly (Cambridge University Press, 2008) Chapter 9. Carolin Haeussler, Dietmar Harhoff and Elisabeth Mller, To Be Financed or Not - The Role of Patents for Venture Capital Financing (Discussion Paper No 200902, University of Munich, January 2009) <>. J A C Baum and B S Silverman, Picking Winners or Building Them? Alliance, Intellectual, and Human Capital as Selection Criteria in Venture Financing and Performance of Biotechnology Startups (2004) 19 Journal of Business Venturing 411, 426. Tania Bubela et al, Recalibrating Intellectual Property Rights to Enhance Translation Research Collaborations (2012) 122(4) Science Translational Medicine 1.





Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

are, in fact, detrimental to innovation (discussed further below). Moreover, recent evidence given to an Australian Senate inquiry on gene patents suggests that in some circumstances isolated sequence claims may be uniquely valuable, particularly in the context of early stage discovery of new vaccines. Professor Ian Frazer played a crucial role in the development of the groundbreaking vaccine to human papillomavirus.28 Although he has been a vocal critic of isolated sequence patents in the past, in his submission to the Australian Senate Legal and Constitutional Affairs Committee during its inquiry into gene patents, he indicated that if an isolated nucleotide sequence claim that corresponded to a naturally occurring nucleotide sequence in the papillomavirus had not been granted, competitors may have be able to produce the vaccine by different technology. 29 This would likely have discouraged his commercial partners CSL Ltd and Merck, Inc from supporting further research and development of the vaccine. While the term different technology may seem somewhat vague in this context, UK litigation involving Kirin-Amgen, Inc and Hoechst Marion Roussel Ltd 30 illustrates how the diversity of biochemical and genetic manipulation techniques allows parties to produce competing products in the absence of isolated sequence claims. The product in this case was erythropoietin (EPO), a hormone controlling red blood cell production. EPO is commonly used for treatment of anaemia, as well as a variety of other disorders, but prior to Kirin-Amgen synthetically producing it, it was not possible to obtain in therapeutical amounts.31 In the recent high profile US Federal Circuit decision of Association for Molecular Pathology v United Stated Patent and Trademark Office,32 Moore J noted that: Erythropoietin, also known as EPO went on to become the biggestselling biotechnology drug developed to that point, resulted in billions of dollars in sales, and accounted for over 50% of Amgens revenue in 1997. Isolated DNA claims, at least in the case of Amgen, represent crucial and exceedingly valuable property rights.


For a brief overview of these developments see: Graeme ONeill, CSL Celebrates Cervical Cancer Vaccine Success (21 November 2002) Australian Life Scientist < accine_success/>. Professor Ian Frazer, Submission No 92 to Legal and Constitutional Affairs Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010, 28 February 2011, 1-2. Kirin-Amgen v Hoechst Marion Roussel [2005] 1 All ER 667. Ibid 673-674. AMP, 689 F 3d 1303 (2012).


30 31 32


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Over the years since its initial patent applications were first filed, KirinAmgen has had to defend its claims relating to EPO in various jurisdictions,33 but only the UK House of Lords decision is relevant for the purpose of the point being made here. The difficulty for Kirin-Amgen in claiming patent rights to EPO was that this protein had already been isolated and purified from urine. This meant a simple claim to the isolated EPO protein by itself would not be novel.34 For various reasons, Kirin-Amgen also could not rely on claims to the nucleotide sequence for EPO in the UK, and, as a consequence, it had to rely on different claims. Kirin-Amgen had invented a method for producing EPO by inserting the nucleotide sequence coding for it into a cell line. The relevant claim in the UK patent was to: A DNA sequence for use in securing expression in a host cell [emphasis added].35 Some time later, Hoechst invented a method for producing EPO by activating expression of the organisms native EPO gene, without having to isolate and insert a foreign nucleotide sequence. 36 The House of Lords interpreted Kirin-Amgens claim to be limited to techniques where the EPO nucleotide sequence came from an organism other than the organism of the host cell. As Hoechsts technique did not require this to be done, the House of Lords found that it did not infringe Kirin-Amgens claim.37 The decision of the House of Lords in this case is a textbook example of claim interpretation. One point that it demonstrates is that a pioneering company like Kirin-Amgen can secure a certain level of exclusivity in reliance on claims other than to isolated sequences. However, it also illustrates that such claims may not be broad and robust enough to exclude future technological innovation. This provides some explanation as to why biotechnology companies argue in favour of retaining isolated sequence patents. Quite whether retaining isolated sequence patents creates the optimal environment for innovation is another matter entirely. The patent system encourages technological diversity by creating monopolies around technologies and allowing third parties to invent around them. If the monopolies are too broad there is little incentive to invent around, but if they are too narrow the incentive to develop the lead technology is diminished. They need to be just right.38 The questions to be ascertained, then, are first,


For example, key US cases include: Kirin-Amgen v Hoechst Marion Roussel [2005] 1 All ER 667; Amgen v Hoechst Marion Roussel, 314 F 3d 1313 (Fed Cir, 2003); Amgen v Hoechst Marion Roussel, 457 F 3d 1293 (Fed Cir, 2006). In Australia, see Genetics Institute Inc v Kirin-Amgen Inc (No 3) (1998) 156 ALR 30. Kirin-Amgen Inc v Hoechst Marion Roussel Ltd, [2005] 1 All ER 667, 674, 702. Ibid 673-674 (emphasis added). Kirin-Amgen v Hoechst Marion Roussel, [2005] 1 All ER 667, 674-675. Ibid 693. Dan L Burk and Brett H McDonnell, The Goldilocks Hypothesis: Balancing Intellectual Property Rights at the Boundary of the Firm (2007) University of Illinois Law Review 575; Dianne Nicol, Strong Patent Rights, Weak Patent Standards and Innovation in Biomedicine in Christopher Arup and William van Caenegem (eds),

34 35 36 37 38


Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

whether the monopoly created by isolated sequence claims is, in fact, just right and secondly, if not, whether there are practicable mechanisms for readjustment.

Tensions and Stakes

Nicols earlier article addressed some of the concerns that have been raised about the potential for isolated sequence patents to detrimentally impact on innovation and access to healthcare, and the body of evidence that has been collected to address these arguments. That discussion suggests that the evidence is equivocal at best, from both the positive and the negative perspectives.39 Building on that article, some key tensions are analysed more deeply here. Before embarking on this analysis, some further context needs to be given about what actually constitutes an isolated sequence claim. There is no one universal patent claim template to describe specific isolated sequences. Nevertheless, it is possible, and useful, to make some generalisations. For the purposes of this article isolated sequences are taken to be claims that are analogous to An isolated nucleotide/polypeptide molecule comprising the sequence of Sequence ID. No: x, in which Sequence ID. No: x refers to a sequences of nucleotides or proteins elsewhere in the specification.40 The aim in this part of the article is to assess the extent to which isolated sequence claims of this nature have the potential to adversely affect development of whole genome sequencing, access to diagnostics and biomedical research.41 Although on first blush these issues do appear to be problematic, when they are put in the proper context of patent law and biotechnology practice, they may not be as significant as first thought.

2.1 Whole genome sequencing

New technological developments are creating renewed concerns about the potential for isolated sequence patents to detrimentally affect innovation and access to healthcare. One specific concern is that isolated sequence patents could negatively impact on the delivery of whole genome sequencing

Intellectual Property Policy Reform: Fostering Innovation and Development (Edward Elgar, 2009) 55-79.
39 40

Nicol, above n 8, 35. Similar assessments have been made in other articles, eg William N Price, Unblocked Future: Why Gene Patents Wont Hinder Whole Genome Sequencing and Personalized Medicine 33 Cardozo Law Review 1602, 1609-1610; Christopher M Holman, Debunking the Myth that Whole-genome Sequencing Infringes Thousands of Gene Patents 30 Nature Biotechnology 240, 242; Rogers, above n 14, 27-29. These three topic areas were selected because anecdotally it appears that they are more closely connected with recent concerns expressed in media, policy and academic articles about gene patents than any other topic areas.



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(WGS).42 This is particularly relevant because the cost of WGS has dropped dramatically in recent years. In excess of $2 billion dollars was spent on the first sequence of the entire human genome through the Human Genome Project. In contrast, it is anticipated that using WGS it will soon be possible to sequence a whole human genome for less than $1000 and that this will become a routine procedure for clinical genetic diagnosis.43 What cheap WGS entails for healthcare and associated research is difficult to predict, but it is widely believed to hold much promise.44 Consequently, it is necessary to consider the circumstances in which isolated sequence patents may adversely affect the provision of WGS. Concerns about potential liability for patent infringement in the context of WGS are aptly encapsulated in a report by the US Secretarys Advisory Committee on Genetics Health and Society (SACGHS): because of the distinct possibility that some patent claims on genes will be infringed by whole-genome sequencing, these patents remain a concern as a potential barrier to the development of whole-genome sequencing.45 Despite this, there is a developing body of literature suggesting that these concerns may be overstated. In a recent article, William Price argues that the term isolated in the context of nucleotide sequences significantly limits the instances in which WGS using traditional sequencing methods (Sanger sequencing) will infringe isolated nucleotide sequence patents.46 The primary reason for this is that Sanger sequencing (on which the first generation of WGS is based) sequences individual fragments up to ~1000 nucleotides in length. 47 Price argues that, since most nucleotide sequences coding for proteins that are claimed in patents are longer than 1000 nucleotides, then isolated sequence claims cannot actually be infringed by Sanger sequencing because the sequences as claimed cannot be isolated in single sequencing runs.48


Secretarys Advisory Committee on Genetics Health and Society (SACGHS), Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests (2010) 58-62. Kevin Davies, The $1,000 Genome: the Revolution in DNA Sequencing and the New Era of Personalized Medicine (Free Press, 2010). Ibid 8-9. SACGHS, above n 42, 58. Price, above n 40, 1619-1624. To give this some context, 3.2 billion or so human nucleotides comprise the human genome. Price, above n 40, 1621-1622. See also Holman, above n 40, 242; Christopher M Holman, Will Gene Patents Impede Whole Genome Sequencing? Deconstructing the Myth that 20% of the Human Genome is Patented (2011) 2(1) IP Theory Article 1; Price also considers claims to shorter fragments of 15 or so nucleotide sequences, such as those claimed in the BRCA1 patent. He reiterates research completed by other authors, that on average shows that the 15 nucleotide sequences in the BRCA1 patent will be reproduced around 340,000 times in human


44 45 46 47


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Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

Price also considers newer second generation sequencing, and like Christopher Holman, argues that when using certain technologies there is no isolation of the relevant nucleotide sequence as defined in isolated sequence claims.49 These newer sequencing techniques include nanopore sequencing and single molecular real time sequencing (SMRT). Broadly speaking, nanopore sequencing operates by feeding strands of DNA through a pore. As the DNA moves through, the shape of each nucleotide, which is unique for each of the four different nucleic acids, is identified by detecting changes in the pore ion current.50 In contrast to the argument made by Price in respect of Sanger sequencing, here he argues that nanopore sequencing avoids isolation because, the sequencing reads are so long that any claimed isolated sequence incorporated in the read only ever constitutes a minor fraction of it. 51 SMRT sequencing operates by having specially labelled nucleotides emit a light source as they attach to a DNA molecule during synthesis.52 Holman argues that SMRT operates without isolation because it relies upon the observation of DNA synthesis within its native environment.53 There is also one rather more subtle, but well recognised aspect of patent law that limits isolated sequence claims from fettering WGS. As discussed in AMP what is claimed in an isolated sequence patent is the chemical, functional aspect of the isolated sequence, not the informational content.54 Traditional WGS techniques and second-generation techniques rely on computers to link together contiguous sequences of letters that are derived from sequencing multiple small fragments of DNA to construct a whole chromosome. Once the fragments have been isolated and sequenced, there is no further requirement to chemically reconstruct the full sequence. The computer only uses the information contained in the sequenced fragments, that is the letters, not the

chromosome one. He concludes that due to the immense amount of sequence data submitted to public databases, claims of this scope using a template claim, similar to the one set out in this paper, are almost certainly anticipated (ie not novel): at 1611-1612. See also Thomas B Kepler, et al, Metastasizing Patent Claims on BRCA1 (2010) 95 Genomics 312.
49 50

See, Holman, above n 40, 241-242; Price, above n 40, 1624-1626. For a comprehensive, yet accessible explanation of nanopore sequencing, see Nanopore sequencing (18 September 2012) Wikipedia <>. Alternatively, see W Temp et al, Nanopore Sequencing: Electrical Measurements of the Code of Life (2010) 9 Transactions in Nanotechnology 281. Price, above n 40, 1625-1626. For a comprehensive, yet accessible explanation of SMRT sequencing, see Single molecule real time sequencing (22 October 2012) Wikipedia <>. Alternatively, see John Eid et al, Real-Time DNA Sequencing from Single Polymerase Molecules 323(5910) Science 133. Holman, above n 40, 242. AMP, 653 F 3d 1329, 1351 (2011); AMP, 689 F 3d 1303, 1330 (2012).

51 52

53 54

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fragments themselves.55 This allows a whole genome to be constructed from a variety of lengths of non-infringing, isolated and sequenced DNA fragments. The arguments made by Price and Holman appear quite compelling and cast some doubt on concerns that WGS will inevitably infringe multiple isolated sequence patents. It is important to recognise that analysis of the specific claim language used in individual patents will be required before it can be stated conclusively that there is minimal risk of infringement. However, this research does suggest that there is a lower than expected risk of wholesale patent infringement by WGS, and that concerns that this might eventuate have not yet been sufficiently substantiated to justify excluding isolated sequences from patenting on this basis alone.

2.2 Access to diagnostics

Denial of access to diagnostic genetic testing has been seen as perhaps the greatest concern relating to isolated sequence patents. In Australia, the recent effort to exclude isolated sequences from patent eligibility was triggered by a company threatening publicly funded research and diagnostic laboratories with patent infringement. 56 Around the world, evidence has emerged of diagnostic laboratories being denied access to tests, difficulties in obtaining second opinions,57 and delays in the development of adjunct or additional tests to diagnose related diseases or to increase the accuracy of current diagnoses.58 While there is no clear evidence of systemic problems with patent enforcement for diagnostic laboratories,59 these are significant issues because cheap, accessible, high quality diagnostic testing is an imperative in modern healthcare and more research is needed to ensure that improvements and modifications continue to be developed. The point here is that it is doubtful that excluding isolated sequences from patent eligibility is a panacea to these problems, even if they do exist. In AMP, the US Federal Circuit unanimously rejected certain of Myriads diagnostic method claims.60 One of the key claims in issue claimed the process of comparing a nucleotide sequence for the BRCA1 gene taken from a tumour sample to sequences for the same gene in non-tumor samples from the same person, to indicate whether a somatic alteration had occurred in the BRCA1 gene in the tumor sample.61 The court held that this was nothing more than

55 56

Price, above n 40, 1625-1626. Senator Heffernan, Submission No 76 to the Senate Community Affairs References Committee, Inquiry into Gene Patents (2010) 1. SACGHS, Gene Patents and Licensing, above n 42, 94-54. Luigi Palombi, Gene Cartels: Biotech Patents in the Age of Free Trade (Scribe Publications, 2009) 248-249. Nicol, above n 39, 24-27. AMP, 653 F 3d 1329 (2011); AMP, 689 F 3d 1303 (2012). Claim 1, US Patent 5,710,001, 17q-linked breast and ovarian cancer susceptibility gene.

57 58

59 60 61

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the abstract mental steps necessary to compare two different nucleotide sequences and therefore not patentable.62 Ostensibly such a finding by the court means that other genetic diagnostic methods will be invalid. However, it is worth nothing that in AMP, Myriad argued that the claims were valid because they implied additional steps of extracting DNA and sequencing using the steps specified in other claims. While the Court rejected this implication, Lourie J seemed to suggest that the claims would have been valid had the additional extracting and sequencing components been expressly included.63 By contrast, in May 2012, 23andMe Inc, was granted a US patent with claims to a method analysing whether human subjects are susceptible to developing Parkinsons disease by analysing nucleotide variations in human tissue samples and comparing them to a sequence specified in the patent. 23andMes patent was granted after the first Federal Circuit decision in AMP and after several other important patentable subject matter cases.64 The key difference in the 23andMe patent claims was that they expressly included steps of obtaining a nucleic acid sequence.65 This is effectively what Myriad argued could be implied into its claims in AMP and what the court hinted would be required to qualify as patentable subject matter.66 On this basis it would appear from the USPTOs examination of 23andMes patent that it sees claims of this nature as valid. This means that other method claims that may be defective for reasons similar to those analysed in AMP may be able to be remedied using 23andMes claims as a model. Various consequences flow from this analysis. In particular, new diagnostic patents are emerging that purportedly satisfy all recent patent validity criteria and that do not rely upon isolated nucleotide sequences. An exclusion of isolated sequences from patenting would not affect the validity of such claims and as such, it may not provide much relief for diagnostic testing laboratories from the risk of being faced with patent infringement actions.

62 63 64

AMP, 653 F 3d 1329, 1356 (2011); AMP, 689 F 3d 1303, 1334 (2012). AMP, 653 F 3d 1329, 1357 (2011); AMP, 689 F 3d 1303, 1334-1335 (2012). Eg Mayo Collaborative Services v Prometheus Laboratories, 101 US 1961 (2012). For a discussion of Prometheus, see Ben Mee, A Judicial Axe for Sharp Drafting: The Natural Phenomenon Dilemma (2012) 22(1) Journal of Law, Information and Science. See also Elizabeth J Haanes and Jaume K Canaves, Stealing Fire: A Retrospective Survey of Biotech Patent Claims in the Wake of Mayo v. Prometheus (2012) 30(8) Nature Biotechnology 758. Claim 1, US Patent 8,187,811 B2, Polymorphisms associated with Parkinsons Disease. AMP, 653 F 3d 1329, 1357 (2011); AMP, 689 F 3d 1303, 1335 (2012). It should be noted that the Supreme Court has granted certiorari only in respect of product claims, not method claims and thus this issue will not be open for further consideration in this case.



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2.3 Isolated sequence claims affecting biomedical research

It is widely accepted that patent infringement actions will rarely be instituted for research use of patented technologies, despite the law being uncertain in this regard. In Australia, for example, until April 2012 there was no statutory research exemption, and no judicial precedents indicating that such an exemption existed at common law.67 The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (Raising the Bar Act) has introduced a limited research exemption into Australian law.68 Empirical research undertaken by Nicol and Nielsen in 2002-2003 suggested that there was already a practicebased research exemption operating in Australia, in that patentees saw it as an unwritten rule that they would not enforce their patents against research use.69 Despite this, there has been one high profile example of threatened enforcement of isolated nucleotide sequence patents against researchers in Australia. It is alleged that Genetic Technologies Ltd threatened to sue the Peter MacCallum Cancer Centre for patent infringement for research-related use of the patented sequences, resulting in a research project being delayed by two years. 70 It has been argued that excluding isolated sequences from patenting would prevent such actions from occurring in future.71 Whilst excluding isolated sequences from patenting might ostensibly achieve this outcome, other claims usually included in patents of this nature would still be infringed. One primary reason for this is that patents that claim isolated nucleotide sequences or recombinant proteins commonly claim the relevant nucleotide sequences in research tools known as vectors as well.72 Examples of this in Australia are claim 5 in Myriads BRCA patent and claim 20 in Kirin Amgens EPO patent. 73 The significance of vectors in biotechnology is that they enable transfer and expression of nucleotides from one location to another. Routine laboratory techniques to clone specific


Australian Government Advisory Council on Intellectual Property, Patents and Experimental Use (Final Report, 2005), 65 <>. Patents Act 1990 (Cth) s 119C, inserted by Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) sch 2 pt 1. A person may, without infringing a patent for an invention, do an act that would infringe the patent apart from this subsection, if the act is done for experimental purposes relating to the subject matter of the invention. Dianne Nicol and Jane Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (Occasional Paper No 6, Centre for Law and Genetics, 2003) 217. Legal and Constitutional Affairs Legislation Committee, Senate, Canberra, 28 April 2011, 2, 4-5 (Dr Mitchel). Luigi Palombi, Submission No 103 to the Senate Standing Committees on Legal and Constitutional Affairs, Patent Amendment (Human Genes and Biological Materials Bill) 2010 (24 February 2011) 6. The other primary reason being that method claims are also still available. See BRCA 686004 see claim 5; for patent 600650 see claim 20. Or more generally see Rogers, above n 14, 28.





72 73

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nucleotide fragments, identify cells, sequence nucleotides, express genetic material in foreign cells and a variety of other techniques are dependent on the use of vectors. While it is possible to carry out some techniques without vectors, this would restrict research as well as being expensive and/or laborious. Claims to isolated nucleotide sequences in vectors will not be affected by an isolated sequenced exclusion. This is because the combination of a vector and a nucleotide sequence would provide patentable subject matter that does not exist in nature.74 Since the technique of inserting nucleotide sequences into vectors is almost invariably applied by all laboratories conducting biotechnological science, it is difficult to perceive how an exclusion of isolated naturally occurring sequences will have the desired effect of relieving research involving isolated sequences from proprietary fetters.

2.4 The stakes summary of the tensions

The first part of this article briefly described some the commercial imperatives for patent claims to isolated sequences. Of particular relevance was that without isolated sequences claims, organisations will attract less money to develop innovations and the development of drugs may be deterred. This part evaluated some of the tensions that exist around isolated sequence patents. The discussion of some of the subtleties of DNA technology and patent law in the context of isolated sequence claims reveals that such claims do not necessarily impose fetters on all artificial use of the isolated sequences. In particular, a number of emerging techniques for WGS may not infringe isolated sequence claims because they do not involve isolation as such. This part also analysed some of the tensions surrounding isolated sequence claims in the diagnostics and research contexts. When properly construed, excluding isolated sequences from patenting is unlikely to shield diagnostic laboratories from patent infringement because such patents have associated method claims. Similarly, although an isolated sequence exclusion might release research use of isolated sequences from some patent fetters, vectors and method claims will still restrict research usage. Better outcomes might be achieved by continuing to allow isolated sequence claims but legislating for exemptions from infringement for research uses (and perhaps noncommercial diagnostic purposes as well75 ). In weighing up the benefits of excluding isolated sequence claims against maintenance of the status quo, it appears that there is little to gain, but much to lose.

Legislating to Exclude Isolated Sequences

The Patent Amendment (Human Genes and Biological Materials) Bill (2010) (the Biological Materials Exclusion Bill) was introduced into the Senate, the

74 75

Rogers, above n 14, 40-41. SACGHS, above n 42, 4.

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upper house of the Australian Parliament, in November 2010 and an equivalent Bill was introduced into the House of Representatives in February 2011. The Biological Materials Exclusion Bill sought to exclude: biological materials including their components and derivatives, whether isolated or purified or not and however made, which are identical or substantially identical to such materials as they exist in nature.76 The Bill further defined biological materials to include DNA, RNA, proteins, cells and fluids. Notably, when the Bill was introduced into the Senate, senators from three of the major parties and one independent member sponsored it.77 Following introduction, the Senate Legal and Constitutional Affairs Legislation Committee (the Senate Committee) was asked to consider whether the Bill should be passed. Public submissions were called for and oral testimony was taken. After receiving 122 submissions and hearing from 31 witnesses, the majority of the Senate Committee reached the conclusion that the Senate should not pass the Bill.78 This conclusion reflected the majority of submissions.79 Here, some of the key points raised in the authors submission to the Senate inquiry together with the majority report of the Senate Committee (the Majority Report) are considered in more detail. 80 The three concerns raised in the introduction to this article in relation to patent law reforms, namely the need for an evidence-base, precise language and clear beneficial outcomes, are discussed in turn.

3.1 The evidence-base

The earlier discussion in this article, building on the material provided in Nicols paper81 suggests that there is not an overwhelmingly strong evidencebase to support major changes to the current patent office practice of granting patents for isolated sequences. While there are isolated examples of detrimental consequences resulting from over-zealous enforcement of patent rights, these are few in number. Quite whether it is appropriate for

76 77

Patent Amendment (Human Genes and Biological Materials) Bill 2010 [No 2] cl 3. Senator Coonan from the Australian Labor Party; Senator Heffernan from the Liberal Party of Australia, Senator Siewart from the Australian Greens and Senator Xenaphon. Australian Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010 (2011), 65. An analysis of the first 110 submissions found that 26 supported the passage of the Bill but 72 did not support it and, of the remainder, ten were generally supportive but concerned about the specific language of the Bill, and the last two were confidential. Mark Summerfield, Late Submissions to Senate Inquiry on Gene Patent Ban on Patentology (28 March 2011) <>. Dianne Nicol, et al, Submission No 39 to Legal and Constitutional Affairs Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010, 25 February 2011. Nicol, above n 8.





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Parliament to enact broad amending legislation to deal with a small number of aberrant cases remains a point of contention. Concerns about the potentially detrimental consequences of enforcement of broad isolated sequence patents on innovation and access to healthcare have led to some attempts in the past to introduce legislation to exclude isolated sequences from patent eligibility in some jurisdictions, including both Australia and the US. 82 However, these were unsuccessful, and the proposition that there should be an express exclusion of this nature has not garnered support in the multitude of law reform inquiries addressing this topic.83 The Biological Materials Exclusion Bill is notable because it provided parliamentarians and interested members of the public with an opportunity to discuss this issue in some detail in the context of increasing concerns about the adverse consequences of allowing patents for isolated sequences. Confirming the reservations expressed in this article, the Majority Report expressed concerns about the lack of a strong evidence-base to justify passage of the amending legislation. Indeed, it was noted that: there was no evidence received by the committee that patents on human genes or biological materials are systematically leading to adverse impacts in the provision of healthcare in Australia.84

3.2 Language of the Biological Materials Exclusion Bill

Although concerns relating to the language of the Biological Materials Exclusion Bill are specific in nature, they also reflect more broadly the difficulties associated with drafting an amendment in language clear enough that it achieves the intended goals (whatever they may be) without creating unforeseen consequences. This illustrates the point that it is always going to be difficult to draft an exclusion of this nature with sufficient clarity and precision. If it had been passed, the proposed exclusion could either have had farreaching or limited effect, depending on the interpretation given to certain terms by the courts and the Patent Office. 85 One example is the word derivative. There are few legal precedents to assist in the interpretation of this word in the context of patent law. It does appear from time to time in connection with natural resources. For example, Article 2 of the Nagoya Protocol defines a derivative as: a naturally occurring biochemical compound

82 83 84

Nicol, above n 8, 18. See generally ibid. Australian Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010 (2011) 62. Ibid 22.


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resulting from the genetic expression or metabolism of biological or genetic resources, even if it does not contain functional units of heredity.86 The International Centre for Trade and Sustainable Development, which provides commentaries in the area of access to natural resources, describes this definition as far-reaching and voices other concerns about ambiguity relating to this and other provisions.87 Hence, at best, this definition of the word derivative would have provided only limited assistance in interpreting its ambit in the context used in the Biological Materials Exclusion Bill. The lack of any attempt to define the word in the Bill itself or in the Explanatory Memorandum or second reading speech would have created undesirable uncertainty had the Bill been passed. The Bill also did not provide guidance as to how the words components and substantially identical should be interpreted. The phrase substantially identical is of particular concern in the context of isolated polypeptide and nucleotide sequences. It is unclear whether the term as used in the Bill was intended to refer to substance or function or both. Would an artificially induced mutation that has not previously recorded, but which has the same functional effect as a naturally occurring mutation elsewhere in a gene, be considered to be substantially identical? 88 This is a particularly pertinent question in areas such as the development of vaccines from virus-based sequences, given that the aim is to produce material that is substantially identical to that in nature.89 Additional problems with the title to the Bill warrant mention, specifically the reference to Human Genes and Biological Materials [emphasis added]. The substantive amendment included in the Bill made no reference to humans as such, aside from the reference to the existing exclusion of human beings and the biological processes for their generation in s 18(2) of the Patents Act 1990 (Cth). Rather, the Bill sought to exclude all biological materials, including all DNA, irrespective of its origin. The title of the Bill could have misled the casual reader into thinking that it applied only to human genes and like subject matter, and was intended to fix what can be referred to colloquially as


Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity, opened for signature 2 February 2011, UNEP/CBD/COP/DEC/X/1, of 29 October 2010 (not yet in force) (Nagoya Protocol). International Centre for Trade and Sustainable Development, CBD Reaches Agreement on Access and Benefit Sharing, But Some Question Its Effectiveness (3 November 2010) 14(38) Bridges Weekly Trade News Digest <>. It is acknowledged here that the term substantially identical does exist in trade mark law, but there is some doubt as to whether much guidance can be obtained from use of the term in this context. American Intellectual Property Law Association, Submission No 100 to Legal and Constitutional Affairs Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010, 15 March 2011, 3.




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the human gene patent problem.90 In fact, the Bill was far broader in scope, and the consequences for microbial, plant and animal biotechnology may have been significant. Aside from these language considerations, the scope of the Bill was of itself problematic, particularly the fact that the exclusion extended to all biological materials, not just isolated sequences.91 Indeed, this seemed to be one of the most concerning aspects of the Bill for many of the submitters to the Senate Committee inquiry.92 The breadth of the term is illustrated in the following list of potentially excluded subject matter from Ausbiotech, the Australian biotechnology industrys lead national organisation: [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.93 More fundamentally, one submission to the Senate Committee inquiry by Professor Andrew Christie pointed out that the Bill addressed the wrong issue. In his view, rather than focusing on whether subject matter is identical or substantially identical to that which exists in nature, the correct question is whether it is an artificially created state of affairs.94 In sum, problems with the language and scope of the Bill led to the following conclusion in the Majority Report: The broad scope of the Bill, and the imprecise language of its provisions, was perceived by many as being potentially detrimental to Australias patent system, the research sector and the many industries reliant on a stable patent system. The committee agrees that this ambiguity in the language of the Bill could discourage investment in research and development, and encourage litigation by those seeking to clarify patent rights.95


Australian Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010 (2011) 19-20. Ibid 22-24. Ibid 30-33. Ibid 30. Ibid 38, adopting the language from the seminal Australian High Court case of the test for patentable subject matter: National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252. Australian Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010 (2011) 60.

91 92 93 94


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3.3 Clear beneficial outcomes

Though problems of scope and language outlined above may have been ameliorated by more precise drafting, questions remain as to whether legislation along the lines of the Biological Materials Exclusion Bill could actually rectify perceived problems associated with patenting of isolated sequences. As noted earlier in this article, it is not just isolated sequences that could have detrimental effects in respect of innovation and access to healthcare. Patents over downstream products and methods could have equally damaging consequences in both spheres. As the authors noted in their submission to the Senate Committee inquiry: 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 claims96 The omission of methods and downstream products from the Biological Materials Exclusion Bill is understandable, given the confines of Australias international obligations. The Agreement on Trade-related Aspects of Intellectual Property Rights 97 (TRIPS) provides the most important international framework within which domestic intellectual property laws operate. Article 27(1) of TRIPS prescribes that patents shall be available for any inventions, whether products or processes, in all fields of technology On one view, the exclusion of biological materials proposed in the Bill would not have been contrary to the requirement that patents are available for inventions in all fields, but only to the extent that biological materials are not considered to be inventions. However, if they are held to be inventions in cases currently before the courts in Australia and the US, problematic questions could have arisen about the legitimacy of the exclusion. It should be noted that there is far less scope for excluding methods98 and essentially no scope at all for downstream products in TRIPS.99 As such, even if it would have been deemed otherwise desirable to exclude these forms of downstream subject matter, the legitimacy of doing so is highly questionable.

96 97

Ibid 27. Marrakesh Agreement Establishing the World Trade Organization, opened for signature 15 April 1994, 1867 UNTS 3 (entered into force 1 January 1995) annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights). Article 27(3)(a) of TRIPS allows member countries to exclude diagnostic, therapeutic and surgical methods for the treatment of humans or animals, this would not include genetic tests conducted outside of the human body. Although Article 27(2) of TRIPS does allow the exclusion of inventions where the exploitation would be contrary to public order and morality, this exclusion is limited in scope. Article 27(3)(b) also allows the exclusion of plant and animal varieties, which are not particularly relevant to the present discussion.



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Legislating to Exclude Gene Patents: Difficult and Unhelpful, or Useful and Feasible?

One significant problem with the exclusion of biological materials is that such an exclusion can be worked around by creative drafting. Specific exclusions from patenting will rarely achieve their intended purpose because of the work around problem. Patent attorneys are specifically trained, within the confines of the law, to draft claims as widely as possible and claim the broadest area of application for their clients invention. Anti-avoidance terms have been suggested as a solution to this type of drafting and this suggestion does have merit.100 But if downstream claims are legitimately drafted and fulfil the inventive step and novelty requirements, it is difficult to see how anti-avoidance clauses would achieve their intended aims. In the context of the Biological Materials Exclusion Bill, because method claims or claims to isolated sequences in vectors were not excluded, patent attorneys may well have been able to draft around the exclusion with relative ease. A further difficulty is that courts and patent appeal boards tend to construe specific exclusions narrowly.101 Hence, it is difficult to conclude that the Bill would have achieved significant benefits as drafted, or that changing the wording would have achieved a better outcome. Added to this, the most controversial patents in the field of biotechnology have already been granted and they would arguably have been untouched by an exclusion relating to new patent applications. Although some submissions to the Senate Committee inquiry presented arguments that the Bill would have retrospective force,102 this was not clear from the wording of the Bill itself. In the view of the authors, the loss of property rights created by statute would require clear and unambiguous language. In looking to the future, the so-called gene patent problem may already have been resolved because of the increasing difficulty in claiming isolated sequences as the prior art expands and sequencing techniques become routine.103 In considering the potential detriment consequences of the Biological Materials Exclusion Bill, had it been passed, the precarious nature of the biotechnology industry needs to be taken into account. In the Australian context, a consistent theme of empirical research on the biotechnology sector is that firms struggle to obtain adequate funds to be able to value-add to the first class research being carried out by public and private sector researchers, and that investors like certainty and are highly risk averse. 104 Although Australia has a number of well-recognised strengths in this field, including


Evidence to Senate Community Affairs Reference Committee, Inquiry into Gene Patents, Senate, Canberra, Thursday 20 August 2009, 6-9 (Dr Peter Drahos) CA2021 and Dr Hazel Moir, Response to Questions, Submission 20, to the Senate Community Affairs Reference Committee, Inquiry into Gene Patents, received 19 September 2009, 6-9. See, for example, Plant Genetic Systems T356/93 (1995) OJEPO 545, [8]. Australian Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010 (2011), 28-29. See for example, Re Kubin, 561 F 3d 1351 (Fed Cir, 2009). Nicol and Nielsen, above n 69.

101 102

103 104

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world-class expertise in research, development and commercialisation of scientific discovery tends to be weak.105 There is a clear need to enhance technology transfer between research and industry and to stimulate flow of medium to long-term venture capital. For around 30 years now, sequence claims and other composition of biological materials have been valid. The passage of the Biological Materials Exclusion Bill could well have had the effect of to increasing uncertainty in this vulnerable industry and deterring investment without having significant beneficial outcomes. On this basis, it is perhaps unsurprising that the Majority Report recommended that the Bill should not proceed.

3.4 Better approaches - holistic patent law and policy reform

As noted in Venturous Australia: Building Strength in Innovation, which reviewed the national innovation system in Australia, it is not clear that a revision of patentable subject matter in isolation is capable of addressing fundamental problems with patent law. Recent changes to Australian patent law resulting from Raising the Bar have addressed some of these problems. In addition to the introduction of a research exemption, mentioned above, amendments to inventive step, usefulness and disclosure requirements are also included. There are additional statutory tools for alleviating hold ups and anticommons risks post-grant, such as compulsory licensing, Crown use, licensing guidelines, competition law as well as other initiatives such as patent pooling and clearinghouse mechanisms.106 These remain active areas of law reform and policy development.107 It is equally important to recognise that ex-ante policy decisions must be made by governments, funding agencies, universities and other research institutions and industry as to whether or not patenting is the optimal strategy for innovation and dissemination of knowledge, both for fields of technology and for individual inventions. Nevertheless, it is recognised that the patentable subject matter requirement has a legitimate role to play in facilitating innovation and dissemination of knowledge and that more guidance may need to be provided to patent examiners with regard to satisfaction of this requirement, particularly in emerging fields of technology. The difficulty in Australia is that there is an insufficient body of case law to guide examiners in new areas of technology. While patent office manuals of practice and procedure provide some


Health and Medical Research Strategic Review, The Virtuous Cycle: Working Together for Health and Medical Research (Final Report, AGPS, 1999) (the Wills Review). The Australian Law Reform Commission (ALRC) canvassed a number of these issues in its inquiry into gene patents and human Health. See, ALRC, Genes and Ingenuity, Report 96 (2004). For example, the Productivity Commission is currently conducting an inquiry into compulsory licensing. See, Productivity Commission, Compulsory Licensing of Patents, Issues Paper (2012).



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guidance to examiners,108 more could be done to assist them in interpreting patent requirements, particularly where the claimed subject matter intersects traditional boundaries between the unpatentable and the patentable. For example, patent examiners could be provided with the option of sending difficult cases to an expert review panel or sending them out for peer review. More streamlined procedures for adjudicating challenges to patent validity might also assist. 109 Steps could also be taken to facilitate public interest litigation, for example by extending the jurisdiction of competition and consumer commissions into intellectual property matters.110


Debate around the need for a statutory exclusion from patent eligibility for isolated sequences raises a range of complex issues that have been the subject of numerous law reform inquiries in Australia and in other jurisdictions. These inquiries all draw attention to the need for a holistic approach to the reform of patent law and patenting and licensing practices to accommodate the challenges of balancing the need to foster innovation in medical, agricultural, environmental and industrial biotechnology with the need to ensure public access to these new innovations and the need to facilitate primary research in each of these areas. The argument that has been made in this article is that at best, a statutory exclusion from patent eligibility is likely to be a token improvement to existing regulatory and governance frameworks in dealing with these challenges and, at worst, it may actually cause greater detriment than benefit.


See, for example, Australian Patent Office, Manual of Practice and Procedure (2012) < ers_Manual.htm>. On this point see Chris Dent, Opposing What? Nature, Purposes and Questions of Reform of the Opposition Decision in the Patent System (2010) 12 Flinders Law Journal 1. Dianne Nicol, Are the Courts Solving the Emerging Challenges of Biotech Patents? in Kathy Bowrey, Michael Handler and Dianne Nicol (eds), Emerging Challenges in Intellectual Property (Oxford University Press, 2011) 145, 163.



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