Just over one year after the Full Federal Court of Australia unanimously upheld an earlier Federal Court decision that naturally occurring nucleic acid molecules are patentable in Australia, on October 7 2015 the High Court handed down a unanimous judgment overturning that decision. This highly anticipated decision reverses decades of accepted practice in relation to the patentability of genes in Australia and now sets Australian law at odds with that of many other jurisdictions, such as Europe and China, where isolated nucleic acid molecules remain patentable.

The BRCA patents – which claim both breast cancer diagnostic methods and the mutated BRCA DNA molecules themselves – have courted significant controversy in both Australia and the United States in recent years. In the United States, this resulted in litigation which culminated in the Supreme Court ruling that naturally occurring DNA molecules were a product of nature and not patent eligible merely by virtue of having been isolated from their natural environment. In Australia, attempts by the Australian licensee to centralise BRCA testing led to the establishment of two Senate enquiries into the impact of granting gene patents, followed by Federal Court litigation which challenged the patentability of the claims to the BRCA DNA molecules. The outcomes of the Senate enquiries and the two initial Federal Court hearings unequivocally supported maintaining the patentability of isolated nucleic acid molecules.

High Court decision mirrors essence of US Supreme Court decision...

The Full Federal Court of Australia, being expressly wary that oversimplification of the facts and underlying scientific principles can lead to incorrect conclusions, clarified that the isolation of DNA is more than just a mere discovery. The court held that the BRCA gene molecule is not the same as its naturally occurring counterpart, as there are both structural and functional differences which result from its isolation, thereby giving rise to the "artificial state of affairs of economic significance" which for decades has been understood to be the threshold that must be met in Australia for subject matter to be patentable. However, the High Court has effectively retreated from what has been regarded as a definitive legal principle in relation to the test for patentability, arguing that this principle should merely be interpreted as a guide in relation to deciding patentability and should not be used as a strict formula. Still further, the court has stated that where the subject matter in issue involves a significant new application or extension relative to the types of subject matter which have previously been determined to be patentable, through the case law evolution process, other factors connected to the purpose of the Patents Act 1990 – including the “encouragement of industry, employment and growth other than just to the inventor for his intellectual percipience” – may assume importance. This is a significant shift in the jurisprudential approach to determining patentability in Australia.  Ultimately, the application of this principle by the High Court to its conclusion that the correct approach to analysing the BRCA claims is to focus on the genetic information contained in the DNA sequence, rather than the characteristics of the DNA molecule itself, has led the court to find that the genetic information in the isolated BRCA DNA molecule was the same as that contained in the DNA of the person from whom the DNA was isolated, and was therefore not patentable. 

...Yet also goes much further

The decision of the High Court takes essentially the same approach as that of the US Supreme Court, but the High Court took its reasoning even further than the Supreme Court. Specifically, the Supreme Court expressly stated that a DNA molecule in which the order of the nucleotides differs from that of the corresponding naturally occurring molecule (eg, a cDNA molecule which inherently excludes the genomic intron sequences) continues to be patentable. The High Court, however, ruled against the patentability of cDNA on the basis that cDNA reproduced a naturally occurring sequence of exons, even though a DNA molecule of this type did not exist in nature. The implications of this finding are extremely concerning. For example, the generation of new versions of naturally occurring molecules which omit functionally unnecessary regions, but which may provide highly useful benefits (eg, those which are inherent in generating and using a cDNA molecule rather than the large and unwieldy corresponding genomic molecule) may nevertheless lack patentability. The crucial issue will be determining at what point the structural changes to a molecule are sufficient to render it patentable. This now introduces a significant element of uncertainty to the issue of the patentability of modified natural products.

Impact of Myriad on biotechnology patents in Australia

From a practical point of view, in terms of isolated nucleic acid molecules this decision is likely to have relatively little impact since the advent of the sequencing of the genomes of many species has effectively destroyed the novelty of claims directed to the nucleic acid molecules which form part of these genomes. Accordingly, patents are now rarely granted to isolated nucleic acid molecules. It is in respect of other 'products of nature', however, that this decision may lead to more serious consequences. 

The outcomes observed in the United States since the Supreme Court's Myriad decision have confirmed the worst fears, with all isolated molecules, cells and other natural products being deemed to lack patent eligibility – that is, there was no basis on which to confine the precedent created by this decision to nucleic acid molecules alone. There is little reason to believe that IP Australia, which will now have to consider how it instructs its examiners to apply this judicial decision, will not adopt a similar approach to that of the US Patent and Trademark Office, since the legal reasoning that the High Court has applied to dismissing the patentability of isolated DNA molecules applies equally to all other isolated naturally occurring substances.

Unwanted consequences

In 2012 a Senate enquiry was established to provide a recommendation to the government in relation to a private member's bill introduced into Parliament that year. The bill proposed banning the patenting of all biological materials. The Senate committee considered at some length the potential consequences that the enactment of such legislation might cause, including the following:

  • The potential exclusion from patentability of not only biological materials which resemble their naturally occurring counterparts, but also their corresponding medicinal forms – specifically, where medicines essentially comprise the biological material itself, such medicines would arguably also be excluded from patentability.
  • Most other developed countries would continue to grant patents to biological materials, and Australia therefore ran the risk of an adverse impact on accessing new patented medicine – ultimately, the decision by patentees to pursue regulatory approval in Australia and to release a product in competition with other companies would be made case by case. However, Australia is a small market when considered globally and preventing the patentability of natural products (eg, biological materials) could effectively make it less desirable as a potential market. 
  • The withdrawal of clinical trials from Australia in relation to molecules no longer patentable.
  • Introduction of uncertainty by the bill as its language would require interpretation to clarify its actual scope – in the case at hand the question of the patentability of non-naturally occurring modified molecules (eg, cDNA) was entirely unclear in terms of where the boundary lies between what types of molecule are patent eligible versus those which are not.
  • The potential to drive investment and therefore research and development overseas, where that research relates to non-patentable biological materials.
  • The possibility that Australia would breach its international obligations under various treaties (eg, the Agreement on Trade-Related Aspects of IP Law) – the question of the impact of this decision on the recently negotiated Trans-Pacific Partnership is highly relevant.

The High Court decision has effectively achieved the same end point that the enactment of the aborted private member’s bill would have achieved. Accordingly, previously theoretical concerns in relation to unwanted outcomes may have now become a reality.

Where to now?

A decision of the High Court of Australia represents the last step in the judicial process. There is no further avenue of appeal. Accordingly, unless another case concerning the issue of the patentability of natural products is brought before the High Court, or Parliament enacts legislation to clarify the issue of patentability, the patentability of natural products in Australia has been dealt a significant blow – one that could be potentially used to invalidate retrospectively granted patents claiming natural products. The uncertainty that this decision has created for the Australian biotechnology and pharmaceutical sectors is concerning and could undermine future investment and innovation.

Ironically, the BRCA patents were filed in the mid-1990s and the earliest of these patents has already expired.  In July 2008 Myriad’s Australian licensee announced that it intended to centralise the diagnostic testing in house. This caused great public concern and triggered the events that led to this High Court decision.

In terms of the justification for the Australian Myriad litigation, it has been asserted publicly that its purpose was to ensure widespread, ongoing and reasonably priced access to this important diagnostic method. Noone disagrees with this objective. However, this decision has had no impact on the existence or functioning of the patent rights granted to Myriad in Australia in relation to the BRCA diagnostic method. The monopoly on this method remains intact and in place. Accordingly, the justification that was used to underpin the importance of Cancer Voices' pursuit of the invalidation of the claims directed to the BRCA gene molecules has done nothing to improve access to existing or future diagnostic methods, which will continue to be patentable separately in Australia. 

Even in relation to the issue of access to the BRCA molecules for research, some years ago Australia enshrined in its legislation one of the broadest research use exemptions in the world. Thus, directing time and energy towards the creation and implementation of appropriate technology-neutral safeguards to prevent abusive monopolistic behaviour would do more to improve any perceived problems in relation to fair and reasonable access to technologies – whether drugs, diagnostics or some future medical technology – than restricting patentability in an ad hoc manner.

Tania Obranovich

This article first appeared in IAM magazine. For further information please visit www.iam-magazine.com.