Patents – method for identifying traits from genetic make-up of cows – manner of manufacture, inventive step, sufficiency, novelty, fair basis, clarity, definition and utility.

Meat & Livestock Australia Limited v Cargill, Inc [2018] FCA 51

As any frequent diner will know, beef comes in grades that differ in quality (ranging from “prime” to “canner”) and hence desirability and price. Of the various characteristics used to determine quality, one is how “well-marbled” is the beef. Unfortunately for the animal in question, determining the level of marbling usually involves inspecting the slaughtered animal (ultrasound testing also is possible, but less accurate). Similarly, determining “tenderness” – another trait associated with higher quality beef – usually requires testing of cuts of meat taken from the slaughtered animal.

For farmers interested in breeding cattle, it would be useful to be able to determine a bull or cow’s genetic potential to produce offspring with tender, well-marbled meat or other desirable traits without first having to kill the parents to do so, for obvious reasons. Indeed, it would be useful to know at a young age whether a particular cow or bull is likely to have desirable traits that might not manifest until much later in life (or after slaughter). Selective breeding has been part of animal husbandry for some time, but some traits are difficult, costly or otherwise impractical to measure. More recently, however, the identification of gene sequences within DNA has revealed that some traits can be passed on readily through the action of a single gene, while others require interaction between many different genes.

Geneticists have begun to take stock of the underlying genes responsible for the presence (or otherwise) of commercially valuable traits in livestock animals, aided by the new fields of molecular genetics and genomics. Various experimental approaches have been developed, but none have proven to be sufficiently predictive of the expression of valuable traits to be useful. These approaches also fail to take into account the “dominance” of certain genes over others, or interactions between genes.

The respondents (for convenience, “Branhaven”, the respondent who actively resisted the appeal) are in the business of raising livestock. The respondents applied for an Australian patent (“Application”) that relates to a method of predicting relevant, desirable traits of cattle using a biological sample taken from the living animal. For example, claim 1 in the Application is for a “method for identifying a trait of a bovine subject from a nucleic acid sample”, where the method comprises identifying at least three particular types of variations in a DNA sequence (called “single nucleotide polymorphisms” or “SNPs”) that are “associated” with a target trait and are found at, or near, specified points in the relevant genetic sequence. For example, the specification lists 2,510 SNPs with a statistically significant association with five particular bovine traits (the “five traits”, which include marbling and tenderness), although the method described in the claim is not limited to those specified SNPs. Readers interested in a more detailed lesson on bovine genetic sequencing should steer themselves towards paragraphs [18] to [145] of Justice Beach’s decision.

The appellants (for convenience, “MLA”) are companies that invest in, and conduct, research relevant to the Australian meat and dairy industries. It objected to the Application, and took its beef to the Patent Office. Before the delegate of the Commissioner of Patents, MLA pressed a number of grounds, including lack of inventive step, lack of sufficiency, lack of clarity, lack of fair basis and that the invention did not relate to a manner of manufacture. It failed on all grounds, save that its objections based on manner of manufacture and lack of clarity were upheld in respect of claim 13. Given how much there was at steak, MLA appealed to the Federal Court.

On appeal before Beach J, MLA ran a case that was “considerably more expanded”, including the grounds referred to above and adding lack of novelty and lack of utility (which had not been pressed before the delegate). The Court also herd considerable additional expert evidence from both sides (pun intended). His Honour was not cowed by the expansion of the scope of the case, however, noting that as an appeal de novo, the case was not required to be “confined to the legal grounds and forensic landscape before the delegate”. Ultimately, the majority of MLA’s grounds of opposition were put out to pasture, save for objections based on lack of clarity and lack of definition.

MLA’s lack of clarity and lack of definition claims centred on two issues. The first involved the construction of the word “associated” in the claims. In his Honour’s view, the degree of statistical significance attendant on the relevant “association” between a SNP and a desirable trait ought to be stipulated; the skilled addressee should not have to shoulder the burden of determining the requisite degree of association. A second issue was the treatment of “linkage disequilibrium” or “LD” (in effect, a tendency for particular genetic markers to be found to be inherited together more than would be expected by chance). Again, in his Honour’s view the claims should incorporate a reference to LD with the specific 2,510 SNPs rather than simply a physical genetic distance (500,000 base pairs from one of the specific 2,510 SNPs).

MLA’s appeal was upheld on those grounds, but with the caveat that the relevant issues might be resolved with appropriate amendments to the Application. The parts of his Honour’s decision dealing with utility contemplate that at some point “appropriate amendments” would be made, although the fate of an application to amend is by no means assured.

On the question of method of manufacture, MLA argued that the claims in the Application effectively related only to “the mere discovery of a naturally occurring correlation between naturally occurring SNPs and naturally occurring traits”. Or put more simply, the claims merely were to information about a naturally occurring phenomenon. His Honour noted that to address that contention, one needed to horn in on the substance of the claims. If all that is claimed is the identification of a natural phenomenon (in this case, a correlation between traits and certain variations in bovine gene sequences), then the invention is not a manner of manufacture. However, as was noted in D’Arcy v Myriad Genetics Inc (2015) 258 CLR 334 (“Myriad”) at [137]:

the application of naturally occurring phenomena to a particular use may be a manner of manufacture if it amounts to a new process or method bringing about an artificially created state of affairs of economic significance. [Justice Beach’s emphasis, and ours.]

Seeking to milk that observation from the High Court in Myriad, MLA argued that the claims in the Application do not “give rise to an artificially created state of affairs”. At best, the invention yields “added knowledge about the inherent nature of the animal”. Naturally occurring genetic information is not patentable, even if “isolated from its natural state”; that information is simply discerned, and nothing is “brought about” in the requisite sense. His Honour disagreed, finding (at [453]) that the claims are directed to methods (and other embodiments) “involving the practical application of the identification of SNPs…and their association with a trait of interest”; those associations are (at [454]) “objectively ascertained correlations” that do not exist in nature (even if the correlated phenomena are), but are an artificial subject matter resulting from human action. Further, that application is being put towards a specified use. The same reasoning applied to the remaining claims, without the need for further rumination.

MLA’s attack on novelty also was rejected. His Honour held (at [521]) that none of the prior art documents relied upon by MLA “provides a disclosure, let alone a disclosure with sufficient clarity, of all of the essential features of the claimed invention”. None of MLA’s prior art disclosed the SNPs identified in the specification or taught the use of three or more SNPs to predict animal traits, nor did MLA establish that following the “clear and unmistakable directions” of its prior art “inevitably” would result in the claimed method.

On the question of obviousness, it was not in dispute that as at the priority date the existing assessment methods for bovine traits, such as the “candidate gene” approach, had gotten off to a jerky start. To apply a “genome wide approach” such as that used by the invention would have been technically challenging, expensive and time-consuming. Further, the use of SNPs as genetic markers in bovines didn’t get a guernsey at the priority date; “microsatellites” were the principal genetic markers used at the time. In summary, his Honour held that MLA failed to establish that the invention as claimed (in any of the claims) lacked an inventive step.

MLA’s attacks on utility focused on the “promise” of the invention to allow “very accurate” prediction of the genetic potential of breeding stock. In contrast, the claims: did not require a statistically significant association between the SNPs chosen and the desired trait (although this would be rectified by his Honour’s suggested amendment); included SNPs that had not been validated in wider bovine populations; included SNPs whose association had been assumed; would not allow multigene, quantitative traits to be predicted from just three SNPs even if individual statistical significance was added as a requirement. On the latter point, MLA’s expert evidence was to the effect that many more SNPs would be necessary to establish the requisite association with a desired trait (and therefore for the invention to be useful). His Honour noted at [839] that the issue of utility (together with those that went to clarity and description) “troubled me the most”.

On the question of utility, his Honour noted at [821] that three questions are to be asked:

What has been promised (as gleaned from the specification) for the invention as delineated by the relevant claim? Is the promise useful? Has the promise been met?

The specification is to be construed from the perspective of a skilled person so as to avoid unworkable results and the specification need not of itself demonstrate that the promise is met by the claims, is commercially practicable, or achieves the promised outcome in all cases. The authors note that these observations mirror the discussions by the Full Court in two recent cases (which we have summarised separately: ESCO Corporation v Ronneby Road Pty Ltd [2018] FCAFC 46 and GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No 2) Ltd v Generic Partners Pty Ltd[2018] FCAFC 71).

His Honour accepted Branhaven’s contention that the specification did not promise a definite degree of advantage from using the invention, and noted that the limiting nature of the amendments foreshadowed earlier (that is, amendments designed to ensure the association between SNPs chosen and the relevant traits was statistically significant) would ensure the utility of the invention. The potential for false positives and a need for the skilled addressees to validate SNPs for their own target population did not detract from that conclusion. MLA having failed to discharge its onus of proof to demonstrate that the method would not produce a useful result in any particular case, his Honour rejected this ground of appeal.

MLA’s objections based on sufficiency centred on an asserted failure by the claims to teach the skilled addressee how to produce something. Further, because alternative methods were claimed in some claims, the specification needed to describe how to perform the invention under all methods claimed, not just one. Similarly, a description needed to be included as to how to perform the invention with respect to each of the five traits. His Honour rejected those contentions, finding that the skilled person could readily – and without undue experimentation – put the invention into practice by performing an embodiment of the invention within the scope of each claim. This could be done simply by choosing three SNPs (in the case of claim 1) from the 2,510 specified SNPs included in the specification, and using them to infer the potential for the relevant population to possess the associated trait. MLA’s evidence did not establish facts to the contrary.

Bringing up the rump was MLA’s objection based on lack of fair basis. MLA’s arguments centred around the fact that the claims claimed methods that were not in their terms limited to the five traits identified in the specification, nor limited to the 2,510 SNPs listed in the specification. To satisfy the requirement in section 40(3) of the Patents Act 1990 (Cth) that claims be “fairly based” on the matter in the specification that discusses the invention, his Honour observed at [917] that “one is looking for a generalised disclosure in the body that provides supports for the claims”. There is no need to require of the specification details of essential integers that correspond with those mentioned in the claim, nor should an “over meticulous verbal analysis” be employed. On that basis, his Honour was satisfied that specification included a broad description of the invention that was not limited to the use of any particular SNP associated with any particular trait. Accordingly, he rejected that ground of opposition.

The outcome of the case was, no doubt, a veal shock and udder disappointment for MLA (and probably perceived as a load of bull). However, the question of whether Branhaven’s interlocutory application to amend the claims of the Application to address his Honour’s concerns will be allowed is stampeding toward hearing.