A New Look at Patentable Subject Matter in Australia: D’arcy v Myriad Genetics

On 7 October 2015, the High Court of Australia unanimously held that isolated nucleic acids are not a manner of manufacture under Australian law.

http://eresources.hcourt.gov.au/showCase/2015/HCA/35 

This is somewhat surprising and overturns the previous unanimous decision of the Full Federal Court of Australia, which upheld the initial Federal Court judgement. The decisions of the Full Federal Court held that isolated nucleic acids are a manner of manufacture as an “an artificially created state of affairs in a field of economic endeavour” that are a result of human intervention.

The test for patentable subject matter in Australia has long been that set out in the National Research Development Corporation v Commissioner of Patents (“NRDC“) case (1959).  That is, patentable subject matter is an ‘artificially created state of affairs’ in a field of economic endeavour.  The Full Federal Court concluded that an isolated nucleic acid sequence involved human intervention and was therefore an artificially created state of affairs.  However, the High Court took a different approach and concluded that the sequence information content of isolated nucleic acids is not “made” by humans but is instead naturally-occurring.  According to the High Court, isolation was the only man-made aspect of the invention, which they held was not sufficient to constitute “an artificially created state of affairs” as required by NRDC.

In D’Arcy v Myriad Genetics, the High Court cautioned against a formulaic application of the principles in the NRDC case.  The question of whether a new class of invention is patentable should be decided on a case-by-case basis, having regard to 6 key factors:

• Could patentability give rise to a large new field of monopoly protection with potentially negative effects on innovation?
• Could patentability have chilling effects on activities beyond the exclusive rights granted to a patentee?
• Would according patentability involve assessing important and conflicting public and private interests and purposes?
• Would according patentability enhance or detract from the coherence of the law relating to patentability?
• Is according patentability consistent with Australia’s obligations under international law and the patent laws of other countries?
• Does according patentability involve law-making which should be done by the legislature?

The High Court decision clearly highlights that  isolated nucleic acids are not a manner of manufacture, and therefore are not patentable subject matter.  The Court criticised the characterisation of isolated nucleic acids as a class of artificial chemical compounds as “elevating form over substance”.  The Court considered that the information stored in the nucleic acids coding for mutant or polymorphic BRCA1 polypeptide was an essential element of the claims in issue and concluded that information was the same as the information contained in the DNA of a person from which the nucleic acids were isolated.  Unlike the corresponding US Supreme Court’s Myriad decision, there was no decision by the High Court that cDNA or other nucleic acids sufficiently altered  by human intervention would constitute patentable subject matter.  It remains to be seen how this decision is interpreted by the Australian Patent Office and the existing holders of Australian patents to isolated nucleic acid sequences.

D’Arcy v Myriad Genetics has implications for the definition of patentable subject matter in Australia. While NRDC remains a relevant precedent, satisfying the criteria in NRDC alone is now unlikely to make contentious subject matter patentable.  This includes inventions relating to other naturally occurring substances, as well as business methods and computer-implemented inventions.  This decision suggests that broader policy factors will also need to be considered.  Rather than clarifying the position, the refining of the NRDC test and the focus on the “substance” or “essential element” of the invention in the decision may introduce uncertainty as to the scope of “patentable subject matter” in Australia.

by Sarah Herbert

IP and Free Trade Agreements

The era of bilateral and smaller multilateral trade agreements culminated on 5 October 2015 with the signing of the 12-nation Trans-Pacific Partnership, covering 40 per cent global economy. Like all trade deals, the TPP is primarily a political deal negotiated by politicians, and is seen as an attempt by the US and Japan to set up a Pacific rim economic zone that doesn’t include the world’s second largest economy, China. Intellectual property was one of the sticking points in the negotiations for this agreement, along with the time period for data lock-up for biologic drugs and tobacco and public health issues, among others. In regard to the inclusion of intellectual property in free trade agreements, the Australian Competition Policy Review (the Harper Review) issued its Final Report in March 2015. Recommendation 6 of that Report was an Intellectual property review by the Productivity Commission focusing on:
• competition policy issues in intellectual property arising from new developments in technology and markets; and
• the principles underpinning the inclusion of intellectual property provisions in international trade agreements.

As we reported on the 20 August 2015, the Treasurer and the Minister for Small Business asked the Productivity Commission to examine Australia’s intellectual property system, in light of the shift towards an innovation economy.

See: http://frankehyland.blogspot.com.au/2015/08/productivity-commission-to-look-at-ip.html

Economically, Australia needs to shift away from its heavy reliance on resources and primary industry. Business leaders and politicians alike are calling for Australia to focus on innovation and technology development in a number of different areas. This shift to innovation as a driving force in the economy is very much based on intellectual property. The Productivity Commission’s recommendations will need to factor in this shift to an innovation economy in its review.

The Commission will also need to consider the fact that Australia is currently party to 10 bilateral or plurilateral trade agreements which include IP chapters. Recently, Australia has recently signed Free Trade Agreements with Korea, Japan and China. In regards to IP protection in their respective countries, Korea, Japan and China have all agreed to provide Australian nationals with equally favourable treatment in relation to IP protection and enforcement. The IP chapter of the Trans Pacific Partnership will also need to be taken into consideration when this agreement is ratified by all signature countries. Free trade agreements largely designed to “reduce or eliminate tariffs and other barriers to trade”. While these free trade agreements are designed to increase trade between the signatory countries,  the Productivity Commission reported in 2010 that it had found 'little evidence from business to indicate that bilateral agreements to date have provided substantial commercial benefits' and that the 'increase in national income from preferential agreements is likely to be modest'. Regardless of whatever economic benefit Australia has or is likely to gain from the free trade agreements it is party to, the Productivity Commission will have to take into account Australia’s obligations under these free trade agreements in its review of Australia’s intellectual property system.

Further details can be found in the link to our full article below.

https://www.dropbox.com/s/vuoknbhr4fj8eaf/Article%20-%20IP%20and%20free%20trade%20agreements_full%20article.pdf?dl=0

by Sarah Herbert

The Process of Invention - Now and Then

http://www.economist.com/news/science-and-technology/21649448-patent-records-reveal-way-inventions-are-made-has-changed-over

Productivity Commission to look at IP Reform

http://www.smh.com.au/federal-politics/political-news/productivity-commission-to-look-at-intellectual-property-reform-20150818-gj1x3f.html

Research and Development Tax Incentives for the Australian Biotechnology Sector

As most businesses close another financial year and finalise their accounts and tax returns, it is a great time to consider the tax offsets and refunds available.

If your company has spent money on research and development activities during the year, then your company might be eligible for a Research and Development Tax Incentive.

The Research and Development Tax Incentive is a self-assessment program that is designed to encourage companies to actively engage in research and development. It provides:

• 45% refundable tax offset for eligible entities with an aggregated annual turnover of less than $20 million; or
• 40% non-refundable tax offset for all other eligible entities.

Do you know what your company can claim?

We have listed below some examples of the activities that, in certain circumstances, might qualify:
• Literature and knowledge review
• Testing and trialling beyond the laboratory
• Field trials e.g. testing whether results obtained in a controlled laboratory environment could be replicated in an uncontrolled environment
• Clinical trials conducted outside of Australia
• Manufacturing activities conducted within and outside of Australia
• Phase IV clinical trials e.g. testing the interaction of the developed drug with an existing commercial drug
• Production line and processing

The Australian Government has released specific guidance to the Biotechnology sector in terms of identifying and describing eligible research and development activities. The guidance also provides detailed case studies and describes the contemporaneous documentation required to substantiate a Research and Development Tax Incentive claim.

Please click on the link below to access this guidance:

http://www.business.gov.au/grants-and-assistance/innovation-rd/RD-TaxIncentive/Eligibility/Documents/BiotechnologySectorialGuide.pdf

If you would like to know more and if you would like assistance in preparing your Research and Development claim, then please contact Claire Thompson of thomoce on 0407 133 991.


by Claire Thompson of thomoce

The End for Innovation Patents?

In a previous blog entitled “The Economic Impact of Innovation Patents”, posted on 11 June 2015, we reported on the IP Australia investigation into the “economic value” of innovation patents.  See:

http://frankehyland.blogspot.com.au/2015/06/the-economic-impact-of-innovation.html

This report concluded that “the innovation patent is not fulfilling its policy goal of providing an incentive for Australian SMEs to innovate, and the evidence shows a reduced likelihood of patenting after participating in the innovation patent system”.  We have some concerns about the methodology and statistical rigour of this investigation.  However, it was considered persuasive by ACIP, the advisory body for IP Australia policy, which concluded that based on the apparent evidence of a lack of economic benefit, the Innovation Patent should be abolished.

IP Australia has recently released a consultation paper specifically mooting abolition of the innovation patent system,  see:

http://www.ipaustralia.gov.au/about-us/public-consultations/Consultation-on-the-ACIP-recommendation-on-the-innovation-patent-system/
.
The Paper seeks views from interested stakeholders on:
• ACIP’s revised recommendation; and
• Any alternate suggestions to encourage innovation amongst small to medium enterprises (SMEs).

Whilst we are of the view that the Innovation Patent requires changes, we think that it would be a dreadful mistake to throw out the entire system, just as the Australian innovation community has become accustomed to it and is starting to use it as a component of a targeted IP strategy.  Industries such as food technology and building products are important areas for using such a second tier patent system.

Innovation Patents enable users to obtain fast, targeted and enforceable protection for smaller inventions.  If the intention of policy is to encourage innovation, it seems counter-intuitive to remove a form of IP, particularly one suited to ‘entry level’ innovators.

We will be making submissions in support of the Innovation Patent system.  If anyone has examples or case studies illustrating their value, we would be delighted to hear from you.

Submissions on IP Australia’s Consultation Paper close on 28 September 2015

Learn Share Connect - Thursday 27 August 2015

https://www.eventbrite.com.au/e/accelerating-commercialisation-tickets-17842051055?utm_source=Product+Design+Language+Event&utm_campaign=7c3881a7d2-Accelerating_Commercialisation_8_4_2015&utm_medium=email&utm_term=0_f6da933ddd-7c3881a7d2-62648737