The High Court has handed down a significant decision finding that patent claims for isolated gene sequences, indicative of a predisposition to breast cancer, are not patentable subject matter. The decision can be found here (a one-page summary has also been published by the High Court).

The decision overturns the unanimous decision of the Full Federal Court (which sat as an enlarged court of five judges) and the decision of Justice Nicholas at first instance, which both found that the gene sequences in question were patentable subject matter. See our update on the on the Full Federal Court’s decision here and the first instance decision here.

The decision effectively transforms the test for patentable subject matter as laid down by the High Court in the landmark decision of NRDC v Commissioner of Patents (1959).

Implications of the High Court’s decision

The decision encourages courts and the Patent Office to adopt a fundamentally different approach when considering patents in new fields of innovation. Rather than applying theNRDC two-part test (which asks whether the invention is directed to an artificial state of affairs with commercial utility), the decision maker is now directed to consider whether, having regard to policy reasons, the claimed subject matter ought to be patentable having regard to a range of factors including the purpose of the Patents Act.

While this approach may be justified on the basis that Parliament (by not legislating) has left this task to the courts, it is likely to lead to uncertainty.

  • It is unclear how these factors will be assessed and the extent to which evidence regarding the potential effects of a finding of patentable subject matter on innovation will be relevant to this assessment.
  • The decision raises uncertainty for inventions in a range of fields. For example, the extent to which computer implemented inventions are directed to patentable subject matter has been the source of uncertainty resulting in disputes before the Federal Court (see our update here). The approach taken by the Court in these cases might be questioned in light of today’s decision.

The decision is likely to have a number of other immediate consequences. It has been the Patent Office’s practice to grant patents for isolated gene sequences - these patents are vulnerable. Patents claiming other forms of isolated natural material are also at risk. The extent to which this may raise an issue in relation to patents for biologic medicines is unclear.

Unless Parliament passes legislation reformulating the test for patentable subject matter, this ground of invalidity (i.e. subject matter not patentable) is likely to become increasingly popular contributing further to the complexity and cost of patent disputes.

Background

The case concerned Myriad’s patent claiming isolated gene sequences including mutations in the BRCA1 gene which indicate a predisposition to breast cancer.

The Applicant, Yvonne D’Arcy, argued that isolated gene sequences are not patentable subject matter as they are naturally occurring and their isolation does not make them sufficiently “artificial” and thus proper subject matter for patent protection. Ms D’Arcy’s case was confined: her challenge was limited to the argument that three claims in the Myriad’s patent claiming isolated gene sequences per se were directed to un-patentable subject matter (i.e. Ms D’Arcy did not challenge validity of the patent on the basis of lack of inventive step or novelty etc).

Myriad argued that the claims satisfied the two-part test for patentable subject matter set out in the High Court’s decision in NRDC v Commissioner of Patents (1959) as they were directed to (1) an artificial state of affairs (2) in a field of economic endeavour.

The Federal Court decisions

At first instance, Nicholas J accepted Myriad’s argument that the isolation of a gene sequence was “an artificial state of affairs” even though the properties of the natural material were the same.

This decision was affirmed by the enlarged Full Court (including a number of Australia’s leading patent judges) which held that the analysis for determining whether subject matter is patentable should focus on the structural and functional differences between the isolated gene sequences and naturally occurring DNA rather than the similarities (i.e. the information contained). The Full Court also considered the fact that Parliament had recently considered and declined to amend the Patents Act to exclude isolated gene sequences from the scope of patentability.

The Full Court considered and decided not to follow the decision of the US Supreme Court finding that the corresponding claims to isolated genes in the US were not patentable. See our update on the US Supreme Court’s decision here.

The High Court’s decision

While the High Court’s decision was unanimous, three judgments were delivered. The leading judgment is that of French CJ, Kiefel, Bell and Keane JJ (“the majority”).

The majority considered that the approach taken in the Federal Court to the application of the NRDC test was “unduly narrow”. Their Honours recognised that the Full Federal Court did not consider that it should determine the question by reference to policy or social arguments but saw its role as to apply the two-part NRDC test.

The majority maintained that the Court should have regard to “purposive and consequentialist considerations which, no doubt, could be classed as “policy” reasons” and view the two factors identified by the High Court in NRDC as forming part of a range of relevant factors. The majority proceeded to identify four other relevant factors:

  1. whether patentability is consistent with the purposes of the Act (including the negative effects on innovation, any chilling effect and the need for the Court to assess public and private interests);
  2. the effect of a finding on the coherence of the law;
  3. Australia’s place in the international community of nations; and
  4. whether to accord patentability would best be left to the legislature.

The majority proceeded to find that the claimed isolated gene sequences were not sufficiently the product of human interaction to constitute patentable subject matter. Applying the additional factors outlined above, the majority identified that a finding of patentability:

  • would result in a chilling effect on legitimate innovation;
  • was not required to achieve coherence in the law; and
  • was not required to achieve conformity with treaty obligations or consistency with the laws of other trading partners.

While the High Court emphasised the need to consider whether a finding of patentability could stifle innovation, it does not seem to have paid as much regard to the extent to which patentability may provide an incentive for innovation.