16 February 2013

Australian Federal Court Declares Isolated Human Genes Patentable

Cancer Voices Australia v Myriad Genetics Inc [2013] FCA 65 (15 February 2013)

LaboratoryIn a landmark decision, a judge of the Federal Court of Australia has upheld a patent granted to Myriad Genetics Inc, confirming that claims directed to isolated genetic materials – such as DNA or RNA sequences – are in principle patent-eligible.

As I reported at the time, the hearing in this case took place almost exactly a year ago, making the judgment one of the most long-awaited in recent memory, certainly within the patent field.  The issue of ‘gene patents’ has been hotly contested in Australia in recent times, with opponents successfully attracting substantial media attention, and introducing proposed legislation to the Australian Parliament (which was subsequently rejected by a Senate inquiry).  A further draft bill, again seeking to amend the Patents Act 1990 to expressly exclude genetic materials from patentability, is still drifting somewhere around the corridors of Parliament House.  We might expect that this bill will re-emerge in the near future, following the current failure to ban gene patents through the courts.

The Federal Court application seeking revocation of three claims of the Myriad patent (‘the disputed claims’) directed to isolated genetic materials was originally filed back in June 2010 (when this blog was in its infancy).  The isolated genes in question are known as BRCA1, which have been found to exhibit certain mutations in women having an enhanced risk of developing breast and ovarian cancer.  They are therefore useful in identifying individuals having an increased cancer risk, and can play a role in early detection and treatment of cancers.

The applicants for revocation were the non-profit advocacy group Cancer Voices Australia, and Queensland breast cancer survivor Ms Yvonne D’Arcy (‘the Cancer Voices parties’).

The Federal Court has completely rejected the application for revocation of the disputed claims, finding all three to be eligible for patent protection under the Australian ‘manner of manufacture’ patentability test.

What the Case Was About

It is firstly important to understand what this case was not about.  The court was asked to consider only whether the disputed claims comprise patent-eligible subject matter under the ‘manner of manufacture’ test applied for this purpose in Australian patent law.  No other ground of invalidity, including lack of novelty, lack of inventive step, lack of utility or lack of fair basis) was relied upon.  As the court noted (at [8]), it could ‘be assumed that the inventors were the first to isolate the nucleic acids referred to in the disputed claims.’

The economic significance (which forms one essential element of the ‘manner of manufacture’ test) of the isolated genetic material was also not in dispute.

The Cancer Voices parties were concerned with one issue only: whether the claimed isolated genes are the kind of thing the patent law is intended to protect, regardless of their usefulness or economic value, or whether they are simply excluded from patentability by virtue of being products of nature rather than of human ingenuity.

Nobody ‘Owns’ Your Genes or Genetic Information

One argument that was put forward by the Cancer Voices parties related to the information content of genetic materials.  There is, they submitted, no difference in the genetic information contained in an isolated sequence, and a corresponding portion of a naturally-occurring DNA or RNA molecule.  But, as the court pointed out (at [76]-[77]), the disputed claims are not directed…

…to genetic information per se. They claim tangible materials. Much emphasis was placed by the applicants upon the informational character of DNA as a storehouse of genetic information. But the disputed claims are not to information as such. They could never be infringed by someone who merely reproduced a DNA sequence in written or digitised form.

Secondly, because each of the claims is to an isolated chemical composition, naturally occurring DNA and RNA as they exist in cell are not within the scope of any of the disputed claims and could never, at least not until they had been isolated, result in the infringement of any such claim.

This is an important point to be noted by those who are opposed to gene patents on the basis that they allow private organisations to ‘own’ human genes or genetic heritage.  Here, the court is saying very clearly that the disputed claims do not encompass the genetic information itself are not infringed by DNA or RNA that exists in nature.

In other words, people, your naturally-occurring genes, and genetic identity, are safe from the clutches of corporate patent-holders!  Patent claims directed to isolated genes cover only the molecules produced in a laboratory by the artificial processes of isolation.

The NRDC Case

The ‘watershed’ case on ‘manner of manufacture’ remains National Research Development Corporation v Commissioner of Patents [1959] HCA 67 (the NRDC case).  The court here relied heavily on the principles set out in the NRDC case, largely avoiding the gloss that might be imposed upon those principles by their application in different technology areas over the years.  The court noted (at [86]) that according to NRDC ‘the concept of manner of manufacture has a “broad sweep” intended to encourage developments that are by their nature often unpredictable.’  It is apparent from NRDC ‘that a product that consists of an artificially created state of affairs which has economic significance will constitute a “manner of manufacture”. In relation to a process, the product is the state of affairs in which an effect may be observed’ (at [88]).

The court’s grappling with the issues at the heart of the question of whether isolated genes are patent-eligible is to be found at paragraphs [101]-[103]:

Whether or not a composition of matter … is a “manner of manufacture” must be decided in accordance with the principles set out in the NRDC case. It follows (leaving aside any relevant statutory exception) that a composition of matter may constitute patentable subject matter if it consists of an artificial state of affairs, that has some discernible effect, and that is of utility in a field of economic endeavour.

It goes without saying that the relevant state of affairs must be the result of some human intervention. After all, it is the element of human intervention that allows one to both characterise the relevant state of affairs as being artificial and to identify one or more inventors who, one way or another, must have brought such a state of affairs into existence in the first place. The real problem lies in knowing, or rather not knowing, what degree of human intervention is necessary before it can be concluded that the requisite artificial state of affairs exists. It is an especially difficult problem in the present case, not so much because the authorities provide no clear solution to it, but because the problem has an almost metaphysical dimension to it.

There are two further points to be made concerning NRDC. First, it is important to note that NRDC does not require the Court to ask whether a composition of matter is a “product of nature” for the purpose of deciding whether or not it constitutes patentable subject matter. NRDC recognises that it may be unhelpful to approach the problem in this way. I think this is especially so in the field of biotechnology in which micro-organisms play a critical role in the development, manufacture and use of diagnostic and therapeutic products and techniques. And second, NRDC does not require the Court to ask whether a micro-organism is “markedly different” to something that already exists in nature for the purpose of deciding whether it constitutes patentable subject matter…. (Emphasis added.)

The argument that a composition is not patentable unless it is ‘markedly different’ from something that exists in nature is one that has been raised repeatedly by opponents of gene patents in Australia.  The latest draft legislation seeking to exclude genetic materials from patentability contains precisely this language.  The court has been very clear here that it does not consider this to be an element of any existing test of whether or not a claimed invention is a ‘manner of manufacture’.  Passage of legislation containing such an exclusion would therefore comprise a substantive change in the law, and not a ‘clarification’, as some gene patent opponents have argued.

In the end, there were three main factors which persuaded the court that isolated genetic material is a ‘manner of manufacture’ according to the principles set down in the NRDC case (see [106]-[109]:
  1. the High Court in NRDC was deliberate in its use of very expansive language regarding the requirement for the creation of an ‘artificial state of affairs’;
  2. in the absence of human intervention, naturally occurring nucleic acid does not exist outside the cell, and ‘isolated’ nucleic acid does not exist inside the cell; and
  3. it is not a reasonable outcome that a person whose skill and effort culminated in the isolation of a micro-organism should be denied a patent because the isolated micro-organism, no matter how practically useful or economically significant, is held to be inherently non-patentable.

Legislative History

The court further found nothing in the recent legislative history of the Patents Act to suggest that it has been the intention of Parliament that isolated genetic material should be excluded from patenting.  Opportunities to introduce an exclusion in the course of other legislative changes have not been taken, and the 2004 Australian Law Reform Commission (ALRC) report on ‘Gene Patenting and Human Health’ found that a change in the existing approach to the patentability of genetic materials was not warranted.

Comparison with Foreign Law

The court also considered the current state of the law in Europe and the United States.  Presently, the position in these jurisdictions, at least in relation to the patentability of isolated genetic materials, is consistent with the conclusion reached in this Australian case. 

In the US, corresponding patents held by Myriad Genetics have been the subject of an ongoing legal challenge similar to that in Australia.  As the matter currently stands, the US law may be regarded as unsettled: the most recent decision of the Court of Appeals for the Federal Circuit (CAFC) included two concurring judgments finding the isolated genetic material claims to be patent-eligible, but by different reasoning, while a third judgment was strongly dissenting on the point.  The case is now on appeal (for the second time) to the US Supreme Court.  But, as the Australian court has said (at [135]):

First, the law in Australia is different. I must apply the law as explained in NRDC. It must also be recognised, especially as the [US] Myriad case heads to the US Supreme Court, that the constitutional setting in which patent legislation operates in the US is quite different to that in which patent legislation operates in this country…. Secondly, the evidence in the [US] Myriad case was not the same as the evidence in the present case. And at least in relation to the matter of covalent bonds, I have taken a different view of the facts to that taken by [CAFC] Judge Lourie.

Patent-Eligibility of Isolated DNA and RNA

The court’s conclusion is clear and decisive (at [136]):

There is no doubt that naturally occurring DNA and RNA as they exist inside the cells of the human body cannot be the subject of a valid patent. However, the disputed claims do not cover naturally occurring DNA and RNA as they exist inside such cells. The disputed claims extend only to naturally occurring DNA and RNA which have been extracted from cells obtained from the human body and purged of other biological materials with which they were associated.

Thus, the disputed claims were found to be for a patent-eligible ‘manner of manufacture’.

Conclusion

The present decision of a single judge of the Federal Court is subject to appeal to a Full Bench of the court within 21 days.  One of the lawyers representing the Cancer Voices parties has been reported as indicating (perhaps prematurely) that ‘at this stage I think I can say that an appeal is likely.’

However, a number of hurdles seemingly stand in the way of an appeal.  Firstly, as is normally the case in Australian proceedings, the court has awarded costs against the unsuccessful Cancer Voices parties.  Considering that pursuing costs perhaps well in excess of A$100,000 from sympathetic figures would be (yet another) public relations nightmare for Myriad Genetics, it seems unlikely that the company will take this further.  However, Myriad cannot be expected to take kindly to being dragged into yet more costly court proceedings on appeal.

Furthermore, Cancer Voices Australia – as both an incorporated association in New South Wales, and a proprietary Australian company – has disbanded and was deregistered in August last year.  Some might argue that this was a shrewd move, in view of the potential liability for costs in the event of a loss in court.  This leaves Ms Yvonne D’Arby as the only remaining party on the opposition side, potentially with sole liability for any costs incurred or awarded.

There was extensive expert scientific evidence provided to the court, which appears to have been of great assistance to the judge.  On appeal, the Full Court would not have the benefit of rehearing the expert evidence, making it likely that it would defer to the primary judge on most, if not all, factual matters.  This potentially limits the prospects of any different outcome on appeal, although the Full Court could nonetheless take a different view on the issue of ‘manner of manufacture’.

In any event, absent an appeal – or, in the event an appeal is lodged, at least pending any outcome – this decision preserves the status quo in Australia: isolated genetic material is patent-eligible on the ‘manner of manufacture’ ground.  Although, as the court was at pains to point out (at [137]), it has had ‘nothing to say about the possible invalidity of the disputed claims on any other ground.’

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