IP owners everywhere are well aware that a ruling on patent eligibility from a country’s highest court can turn a market on its head overnight. As IAM has detailed in the past, the extent to which an IP office offers well-defined guidance on those decisions goes a long way toward either bringing clarity to asset valuations or further muddying the waters. Our readers are no doubt aware of the High Court of Australia’s shock decision two weeks back in D’Arcy v. Myriad Genetics, holding that isolated nucleic acid molecules are not patent eligible. Because the ruling overturns decades of accepted practice, it is bound to have big ramifications. But in a potentially promising sign for the biotech sector, IP Australia - the country's patent and trademark agency - has put forth a relatively restrained interpretation of the case for public comment.

IP Australia’s proposed guidelines, released four days ago, stand in marked contrast to the USPTO’s interpretation of the US Supreme Court judgment in an analogous Myriad case. Whereas the US office applied the decision to all claims directed or relating to ‘natural products’, the Australian authorities propose to deny eligibility only to a few specific categories dealt with directly in the High Court case. “They’ve taken a narrow view of the decision, which I think is a good thing”, says Bill Pickering, partner at Davies Collison Cave. “I thought IP Australia might come out with guidance much more similar to what we saw from the USPTO, and that they didn’t is welcome news.”

This is a big deal because patents are rarely granted to isolated nucleic acids these days anyway, owing to advances made in sequencing the genomes of many species. So it could be argued that expansive interpretations of the Myriad cases, rather than the judgments themselves, are what pose the greatest threat to biotech patent portfolios. Indeed, says Pickering: “I think the biotech industry will be quite relaxed given IP Australia’s guidance. The substances they’re probably most concerned about are the ones the patent office has said are still patentable, such as isolated stem cells, isolated cells, and molecules purified from natural sources.”

The 2014 USPTO guidelines which sought to apply Alice, Mayo, and Myriad drew criticism from multiple sources, with the Electronic Frontier Foundation complaining that “the Office simply summarises a series of court decisions without explaining how examiners should apply them to new applications”. While IP Australia’s guidelines appear pretty straightforward, there are certainly still issues to be ironed out, some of which may find their way back to the judicial branch.

For example, Andrew Rankine, special counsel at DibbsBarker, notes: “While the Commissioner has proposed that claims for cDNA will no longer be accepted, there is some doubt as to whether that necessarily follows from the High Court’s decision. […] If the Commissioner’s proposed practice is adopted, ultimately these questions would need to be resolved by the courts.”

It is impossible to know where the eligibility line will be drawn in the end, and that in itself is a negative for patent owners in this field. “The High Court decision in Myriad has the same effect as the Supreme Court decision in the United States: it generates uncertainty, and patents which were always believed to be valid, even given these guidelines, may now be invalid,” says Pickering. And, he continues: “Decisions which create uncertainty always affect the value of IP. If you’re a licensor, the licensee will now be claiming the patent is not valid in order to decrease the royalty.”

In that sense, Myriad may be a bell that cannot be un-rung. But the sooner IP Australia can restore some degree of certitude to the market, the better.

First published on IAM Media, 20 October 2015 and written by Jacob Schndler