The Federal Court of Australia has upheld a decision to allow patents to diagnostic methods involving the practical application of natural phenomena (including nucleotides) in the case of Ariosa Diagnostics, Inc v Sequenom, Inc (Sequenom 2021).1 The Full Court upheld the primary judge’s finding that Ariosa’s Harmony Test for chromosomal abnormalities in a foetus infringed Sequenom’s Australian Patent No. 727919 for a non-invasive pre-natal method of diagnosis.

This decision contrasts with the widely publicised decision in an equivalent matter in the United States (Ariosa Diagnostics, Inc. v. Sequenom, Inc. 788 F.3d 1371 (Fed. Cir. 2015)).2 The decision in the US was controversial because at least some members of the US Court of Appeals for the Federal Circuit (CAFC), recognising the contribution of the invention, expressed misgivings but felt bound by precedent to rule that the subject matter was patent ineligible. The result in Australia is unsurprising but is, nevertheless, welcome. Notably, the Australian decision also aligns with a recent ruling regarding the validity of an equivalent UK Patent (Illumina, Inc v Premaitha Health Plc [2017] EWHC 2930).3

The Full Court upheld the primary judge’s findings in relation to infringement, with the notable exception of instances where the claimed method was performed overseas before the outcome of the method (the test results) was supplied to healthcare professionals in Australia. Contrary to the primary judge’s decision, the Full Court held that infringement had not occurred in such cases, as they considered the test results to be “mere information” and therefore not a “product” falling within the scope of the patentee’s right to exploit the invention.4

Patentable Subject Matter

In order to be considered patentable subject matter under Australian Law, an invention must be a manner of manufacture.5 While there is no definitive verbal formula, the general principles for establishing manner of manufacture as laid out in National Research Development Corporation v Commissioner of Patents (NDRC) are that there must be an artificially created state of affairs and the invention claimed must have economic utility.6

Claims directed to isolated naturally occurring nucleic acids were considered by the High Court of Australia in D’Arcy v Myriad Genetics Inc (Myriad).7 While ostensibly directed to an artificial product (an isolated nucleic acid), the Court held that the substance of such claims is genetic information that has been discerned and not made. The Court considered that to attribute patentability to an invention not brought about by human action would involve an extension of the concept of a manner of manufacture which was not appropriate for judicial determination.

Decision in the first instance

The patented invention relates to a method for detecting the presence of nucleic acids of foetal origin (i.e., cell-free foetal DNA, designated cffDNA) in a serum or plasma sample obtained from a pregnant female. In infringement proceedings, Ariosa, together with licensees Sonic Healthcare Ltd. and Clinical Laboratories Pty. Ltd. (collectively, Ariosa), cross-claimed for revocation asserting that the relevant claims did not claim patentable subject matter. Notwithstanding that the claims are directed to a method, Ariosa argued that the substance related to a mere discovery of a naturally occurring phenomenon, asserting that, where human interaction was involved, the outcome of each of these claims was mere information.8

Justice Beach, the primary judge, found the claimed invention to be patentable subject matter on the basis that, in contrast to Myriad, none of the claims were not directed to genetic information per se but to methods for detecting a specific type of DNA i.e., cffDNA.9 Further, Beach J found that the invention involved human action in creating an artificial state of affairs (through obtaining the blood sample, separating the components, extracting the DNA, and discriminating between maternal and cffDNA), as well as economic utility and practical application as a novel, non-invasive means of prenatal diagnosis.10

Infringement was found, including for a period from 2014 to 2017. During this period, blood samples were collected in Australia, but the Harmony Test was performed on the samples in the US before the results were delivered to healthcare professionals in Australia (i.e., the “send out” model). The primary judge found that Ariosa had infringed Sequenom’s patent during this time period, on the basis that the results of the Harmony Test constituted a “product” being supplied under the definition of the term “exploit” as defined in the Patents Act 1990 (Cth) (the Act).11

Appeal

An appeal was heard by the Full Federal Court on 18 July 2021. Ariosa appealed the 2019 decision on a number of grounds, most notably the findings on manner of manufacture and infringement.

Manner of Manufacture

In relation to manner of manufacture, Ariosa contended that the substance of the claimed invention was the exploitation of known methods to detect a naturally occurring substance. Specifically, Ariosa submitted that the claimed invention did not, in substance, involve an artificially created state of affairs, and instead related only to a “mere discovery of a naturally occurring phenomenon”, and that when properly construed the end result of the claimed invention was information only (i.e., namely the presence of cffDNA).12

The Full Court noted that Myriad alluded to method claims involving naturally occurring nucleic acids, indicating that, in contrast to product claims, such claims would likely be considered patentable.13 In this regard, the Full Court found that the substance of the invention was not the cffDNA itself (i.e., mere “naturally occurring information”), or the mere observation that cffDNA was present in maternal plasma or serum. Instead, the substance of the invention lay in devising a new means for detecting foetal DNA without the need for invasive sampling, that overcomes difficulties involved in using maternal blood. As such, the invention as claimed is not merely the output, but the detection process which yields the output and “This is the very type of subject matter considered to fall on the correct side of the line between discovery of a scientific fact or law of nature and invention.14

Infringement

With regards to infringement, Ariosa sought to appeal the primary judges’ findings on a number of grounds, notably including those instances where the Harmony Test was performed and supplied under the send out model. Ariosa submitted that the Harmony Test results should not have been considered a “product” within the definition of “exploit”, but as “information” only, and therefore that performing the test outside of Australia and reporting the results to a patient inside Australia did not constitute infringement.15

Under the Patents Act 1990 (Cth), a patentee is granted the exclusive right to exploit the claimed invention and to authorise others to do so.16 Where the claimed invention is a method or process, the Act indicates that the term “exploit” extends to use of the “product” of that method or process. The same definition states that exploiting a “product”, includes the right to make, hire, sell or otherwise dispose of, offer to make, hire, sell, or otherwise dispose of, use, or import said product, or to keep said product for the purpose of doing any of these activities.17

In the first instance, Justice Beach concluded that a product resulting from the use of a method or process includes “anything resulting from the patented method that can be commercially exploited”. The Full Court respectfully disagreed with this approach, concluding that results from the use of the methods of detection or diagnosis claimed in the Sequenom patent do not conform with the meaning of “product” within the definition of “exploit”. The Full Court stated that the term “product” within this context should not “be interpreted as extending the patentee’s monopoly to information which could not itself constitute patentable subject matter”, as such an interpretation would essentially allow a patentee to gain patent protection for unpatentable subject matter.18

Accordingly, the Full Court partially overturned the decision of the primary judge, ruling that Harmony Tests performed and supplied under the send out model had not infringed the relevant claims. On all other counts of infringement, the Full Court upheld the primary judge’s decision.19

Conclusion

The Full Court confirmed the patentability of diagnostic methods involving the practical application of natural phenomena (including nucleotides) in Australia.

However, the Court found that where such a method is performed entirely outside of Australia, importing and supplying the outcome of the method (e.g., the Harmony Test results) is not an infringement. This result arose due to the way the term “exploit” is defined in the Patents Act 1990. Added to the disquiet around the recent decision in Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd (in which it became apparent that the definition of “exploit” is silent concerning situations where a patented product is used overseas to make a product which is then imported into Australia), the time may have come for a review to ensure that the rights of patentees are adequately protected.20