21 June 2015

Patentability of Genes May Turn on Claim Construction

DNAA Full Bench of all seven judges of the High Court of Australia heard oral arguments in the appeal by Yvonne D’Arcy in the Myriad Genetics BRCA gene patent case starting on Tuesday 16 June 2015, and continuing through the morning of Wednesday 17 June 2015.  Transcripts of the first day and the second day of the proceedings are available.

As a preliminary matter, the High Court determined on Monday 15 June 2015 that it would not allow the application by the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) to intervene in the case as amicus curiae.  I wrote previously about IPTA’s application, and subsequently about the opposition by the Commonwealth, and I am not at all surprised that the High Court turned IPTA down.

Based on the transcripts, it appears that there are up to four key issues that may determine the outcome of the appeal, i.e. whether or not Myriad’s claims to the isolated BRCA genes (and, by extension, all other patent claims directed to naturally-occurring genes that have been isolated from their natural environment) are proper subject matter for a patent under Australia’s ‘manner of manufacture’ test for patent-eligibility.

Those four issues are:
  1. the proper construction (i.e. interpretation) of Myriad’s claims – more particularly whether they are, in substance, directed to a molecule or to ‘information’;
  2. whether or not the test for ‘manner of manufacture’ requires a nexus between what is ‘artificial’ in an invention, and its economic value (and, if so, whether such a nexus exists in the case of isolated genes);
  3. the desirability of consistency with the laws of Australia’s major trading partners and, if this is desirable, which of these other countries we should follow; and
  4. the significance of the Australian Parliament’s repeated decisions not to introduce an express exclusion from patentability for ‘products of nature’ when the opportunity has arisen.
Reading the transcripts, it is not at all clear to me which way the seven judges (individually, or as a group) are likely to rule in this case.  While they certainly interrogated David Shavin QC (Queen’s Counsel appearing for Myriad) far more vigorously than David Catterns QC (Queen’s Counsel appearing for Ms D’Arcy), my impression is that Mr Shavin had answers for all of the judges’ questions and that, on balance, Myriad’s case is more consistent with the Australian authorities on patent-eligibility.  At the same time, however, it appears that at least some of the judges are disposed to rule against the patentability of isolated genes.

Patent-Eligibility in Australia

There was no dispute between the parties that the touchstone for patent-eligibility in Australia remains the 1959 decision of the Australian High Court in National Research Development Corporation v Commissioner of Patents (‘NRDC’) [1959] HCA 67.

The guiding principle established by the High Court in NRDC is essentially that the question of whether or not new subject-matter is eligible for patenting should not be constrained by the example of what was previously considered patentable, but rather by whether or not the invention ‘consists in an artificially created state of affairs’ (i.e. something which, but for human intervention, would not exist), having economic significance (i.e. that it ‘belongs to a useful art as distinct from a fine art’).  It is this ‘two-part test’ that is effectively encoded in the language ‘manner of manufacture’ that has been carried over into the modern Australian patent law.

The High Court in NRDC also rejected a proposition that agricultural or horticultural processes were subject to some special ‘exclusion’ from patentability.  This is not an aspect for which the NRDC decision is celebrated, but it is somewhat pertinent to the question of whether patents may be granted over subject matter that might, in some sense, be regarded as the ‘work of nature’.

The Construction Issue – Information or Chemical Compound?

To understand the dispute over the proper construction of Myriad’s claims it is necessary to look at the specific wording of claim 1, which is representative of a broad range of claims that have typically been employed to protect isolated genes.

The claim recites (I have bolded a few words to draw attention, for reasons that will become apparent):

An isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide, said nucleic acid containing in comparison to the BRCA1 polypeptide encoding sequence set forth in SEQ.ID No:1 one or more mutations or polymorphisms selected from the mutations set forth in Tables 12, 12A and 14 and the polymorphisms set forth in Tables 18 and 19.

This claim defines a product, being a ‘class’ of nucleic acids, by reference to a ‘normal’ sequence that is set out in one lengthy listing appearing in the patent specification (i.e. ‘SEQ.ID No:1’) and to a number of mutations identified by Myriad as being associated with an increased risk of developing breast cancer, and set out in a number of tables within the patent specification.

I refer to a ‘class’ in the preceding paragraph, because there is more than one specific nucleic acid molecule that meets the criteria set out in the claim.  However, all members of this class have the defined property that they all ‘code for’ a mutant or polymorphic BRCA1 polypeptide.  That is, when in the normal cellular environment they provide the ‘blueprint’ for making this polypeptide.

Mr Catterns argued (for the appellant, Yvonne D’Arcy, against patentability) that the claim defines ‘information’, i.e. that the key element in the claim is the phrase ‘coding for’.  The information, i.e. what I called the ‘blueprint’ above, is no different in the isolated gene than it is in the gene in its natural state, within the cell, no matter how many structural differences may exist.

Mr Catterns thus contended that the Full Court (see Australian Court Backs Patents on Isolated Genes) fell into error by determining that the isolated nucleic acid ‘is chemically, structurally and functionally different’ from its form within the cell, and that ‘it is functionally different because it is not making the polypeptide when it is isolated’.  Rather, ‘the relevant function is possession of the code’.  If this is so, then there is no relevant difference between the isolated gene, and the gene in its natural state which (goes the argument) means that it is not an ‘artificial state of affairs’, and therefore not a manner of manufacture.

On the other side, Mr Shavin argued that the key term in the claim is the word ‘isolated’, which embodies the result of all of the work done to extract the relevant sequence from the DNA as it exists within the cells of a human subject.  On this view of things, the wording of the rest of the claim is simply a convenient way (the term used by Mr Shavin was ‘shorthand’) to define a class of molecules (i.e. chemical compounds, being nucleic acids) that would otherwise be unwieldy to define in terms of their full chemical structures.

As Mr Shavin pointed out, patent claims directed to entire classes of molecules, such as pharmaceutical compounds in which only a part of the molecule is critical to producing the desired activity, are entirely commonplace, and are now so uncontroversial that they are rarely challenged.  Why then (goes the argument) should a class of nucleic acids, if defined with sufficient clarity, not equally be patentable subject matter?

The Nexus Issue – Is the Value in the Artificiality?

As I have already noted, the NRDC test for patent-eligibility includes two essential requirements:
  1. there must be an artificially-created state of affairs; and
  2. there must be ‘economic significance’ to what is claimed.
If the claim construction issue goes Myriad’s way, then the first of these two requirements will be satisfied.  The economic significance of the claimed invention, for example in its utility for testing women to determine their genetic predisposition to develop breast cancer, has never been in dispute.  So you might think that winning the construction argument would automatically result in a win for Myriad.

However, a number of the judges appeared to have concerns about this conclusion.  Their problem, as I understand it, was that there is an important difference between a ‘traditional’ chemical compound invention (e.g. a pharmaceutical product, or an agricultural chemical) and the compound protected by an ‘isolated gene’ claim.

The ‘traditional’ compound claim – even if the molecule is something that can be found in nature – protects something that is made and sold.  The ‘gene’ claim, on the other hand, protects something that is isolated from a human subject for diagnostic or therapeutic purposes.  On one view, therefore, the aspect of the gene that provides economic value is not its structure or chemical activity, but the information it contains.

Mr Shavin was questioned at some length about this issue.  Specifically, some of the judges put forward the proposition that the ‘economic significance’ required by NRDC must be substantially coincident with the ‘artificiality’.  Thus (goes this particular argument), if the artificiality lies in the isolation of the molecule, but the economic significance lies in the information, then maybe you do not have a ‘manner of manufacture’ according to the NRDC principles.

In short, Mr Shavin’s reply to the questioning was that the isolation is integral to the economic significance because without isolation of the molecule the information cannot be accessed and used.  As he put the point in response to Justice Gageler:

Your Honour has put to me the observe of the proposition which I have made a few minutes ago, where our principal submission is that that which gives utility to the nucleic acid sequence is that it is isolated. What your Honour is saying to me is that what gives utility to the isolated acid is that it has the coding sequence. What that points to is that they are complementary, that what you have of utility is the sequence isolated. That which makes it artificial is the isolation, and the fact of isolation makes it useful.

Personally, I think this is a pretty sound answer to the challenge.  Whether the judges will be convinced remains to be seen.

The Consistency Issue – US, Europe, or Neither?

It is generally regarded as desirable that Australian patent law be broadly consistent with our major trading partners.  It is, however, impossible for us to be simultaneously consistent with the US and Europe (for example) in this case.

Mr Catterns, of course, argued for the desirability of being consistent with the US, where the Supreme Court held (in Association for Molecular Pathology v Myriad Genetics, Inc. 569 U.S. ___) that ‘a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated’, although it also determined that cDNA (an ‘informationally-equivalent’ molecule produced by human intervention) ‘is patent eligible because it is not naturally occurring.’

Mr Shavin, equally logically on his side of the matter, argued for the desirability of consistency with Europe (including the UK), where Article 5 of the Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions (a.k.a the ‘Biotechnology Patent Directive’) includes the following provisions:

2. An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.

3. The industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.

There appeared to be some agreement among a number of the judges, and Mr Shavin, that if Mr Catterns were correct, and the essential component of the claimed invention is the information content, then this may also exclude cDNA, leaving the Australian law inconsistent with both Europe and the US!

The Reform Issue – Does It Matter What Parliament Does Not Do?

In recent years, the Australian Parliament has had a number of opportunities to amend the Patents Act 1990 to exclude isolated genes from patentability, and has not done so.  This fact was taken by the Full Federal Court, in D'Arcy v Myriad Genetics Inc [2014] FCAFC 115, as a further indication that it was not the place of the courts to make policy-based decisions in this area.

It was necessary, however, for Mr Shavin to be a little careful in raising this issue before the High Court.  As recently as December 2013 the Court had considered ‘manner of manufacture’ in relation to patentability of methods of medical treatment (see High Court Rules Methods of Medical Treatment Patent-Eligible).  In that case, the Chief Justice himself noted that ‘[a]s appears from the shifting history of the understanding of "manner of manufacture", legislative silence in this field is an unsure guide to the development of principle’ (Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [2013] HCA 50, at [19]).

In the case of isolated genes, however, Mr Shavin noted that it has not been a case of ‘legislative silence’, but rather a situation in which, as a result of ‘recommendations from committees of inquiry and the rejection of a Private Members’ Bill, you have a plain statement by the legislature that it will not enact the exclusion.’  Indeed, the Parliament has implemented ‘a number of recommendations, including stricter tests in relation to other patentability requirements and, importantly in the consideration of the balance between incentives and the flow of information … the introduction of a new “experimental use” defence.  The recommendations resulted in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.’

This is, I think, something to which the Court will need to give due consideration.  Whether it will consider itself in any way bound by the apparent choices made by the Parliament is another matter.

Conclusion – A Close Call?

Although some observers have predicted a possible ‘upset’ against Myriad in the High Court proceedings, based on the judges’ interrogation of Mr Shavin, I am not so sure the proceedings can be read this way.  Tough questions from the bench are only a problem if you do not have answers, which was not the case here.

Certainly, some of the judges appeared to be predisposed against Myriad’s claims to isolated genes.  Ultimately, however, they will need to deliver a judgment with a sound basis in Australian law. 

The Court could find – as urged by Mr Catterns – that the claims are directed to genes characterised by ‘possession of the code’, however this is at odds with the usual interpretation of a product claim, and creates a further problem in that corresponding cDNA (which even the US Supreme Court has acknowledged as patent-eligible) possesses the same code.

Alternatively, the Court could agree with Mr Shavin that the claims are directed to molecular nucleic acids, but nonetheless find that they fall outside the concept of a ‘manner of manufacture’, perhaps because the economic significance lies in their information content rather than their molecular structure as such.  This presents problems of consistency with the established treatment of claims directed to chemical compounds.

The Court may also have to address the international consistency question – to which there is no satisfactory answer, without privileging one jurisdiction above another – and the issue of deliberate inaction by the Parliament in relation to patenting of isolated genes.

With all of these complexities, and the different lines of questioning pursued by different judges, it seems unlikely that the Court will deliver a unanimous judgment.  It is, therefore, very difficult to predict the outcome.  If pressed for a prediction, I remain of the view that the High Court will, by a majority, uphold the unanimous decision of the Full Federal Court (and of the judge at first instance) in favour of Myriad.  But it is looking to be a close contest.


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