Alternative legislative options in the gene patent debate

Background
There has been much debate, particularly in the media, prompted by the US district court decision of 23rd March 2010 in the matter between the Association for Molecular Pathology and others, and the US Patent and Trademark Office, Myriad Genetics and others, which held that isolated DNA and its uses in diagnostic tests represented unpatentable subject matter.

On 8th June 2010 similar proceedings commenced in Australia in relation to corresponding Myriad patents relating to the breast cancer genes BRCA1 and BRCA2, licensed to Genetic Technologies Limited.

We have previously reported on the Senate committee inquiry into the patenting of genetic technologies and its impact on the provision and cost of healthcare, progress in medical research and the health and wellbeing of the Australian people (see Outlawing of gene patents remains on political agenda) and the published opinion of a prominent member of the Australian Parliament on the topic (see Gene patents under the microscope).

Latest developments 
Several politicians have now introduced their own private bills into Parliament, one of which sought to prohibit all biological materials (not just genes and proteins) and their methods of use from patentability through amendment to the Patents Act 1990.

The Senate inquiry published its report on 26th November 2010, making 16 recommendations. The executive summary stated that: “A number of considerations persuaded the committee that it would not, at this point in time, recommend that the act be amended to expressly prohibit the patenting of genes.”

The inquiry concluded that there were only isolated incidents of the impact of gene patents on the provision of healthcare and medical research, and that there is evidence that this impact has been positive. A highlighted deficiency was the inadequacy of health policymakers in Australia to monitor for and collect hard data of occurrences of gene patents negatively impacting on the health sector.

The report suggested that proposed reforms to the inventive step test, the usefulness requirement and the full description and fair basis requirements for patentability under the Patents Act may go a long way to "limit the reach of claims so that the protection given to an inventor is not disproportionate with what has been described".

Alternatives to banning DNA and related technology from patentability can be found in the Patents Act. These are all government-implemented measures to address the inappropriate exploitation of a patent in a way that greatly impacts on others in society.

Crown use provisions
Under Section 163 of the Patents Act, the government or an authorised representative may exploit a patent without infringement liability if exploitation of the invention is necessary for the proper provision of government services within Australia. Australia has a strong public hospital network and a universal, government-funded healthcare system, both of which might be able to exploit these provisions.

The government must inform the patentee and reach an agreement with it in relation to the terms of exploitation and remuneration.

The exploitation of a patent for Crown use has occurred on only two occasions, both of which were contested by the patentee. The cases are Stack v Brisbane City Council ((1994) 31 ALR 333) and General Steel Industries Inc v Commissioner for Railways (NSW) ((1964) 112 CLR 125) – the former related to water meters and the latter to railway carriage construction.

According to the Australian Law Reform Commission, Crown use provisions involve significant interference with the rights of the patentee to exploit the invention according to their terms. There is an argument that exercise of Crown use provisions should be employed only in situations such as public health emergencies or for the protection of citizens. Nevertheless, Stack and General Steel provide precedents for the government to take action in a public policy matter without the need to enact revisions to the law.

If there is no empirical evidence to suggest that gene patents generally hinder research or the ability of diagnostic labs to perform testing, then the accessional miscreant may be dealt with by the threat of Crown use of the invention by a public organisation, such as a hospital that provides genetic testing. 

One advantage of invoking Crown use provisions is that the healthcare authority would not need to instigate court proceedings or undertake protracted negotiations.

Compulsory licence provisions
A person may apply to a prescribed court for a compulsory licence to exploit a patent after a period of three years from the date of patent grant.

The court may award a compulsory licence if:

• The reasonable requirements of the public with respect to the patented invention have not been satisfied.
• The patentee has not given a satisfactory reason for failing to exploit the invention.
• The applicant has tried for a reasonable period to obtain a licence on reasonable terms.

The reasonable requirements of the public may be considered not to have been met if an industry or trade in Australia is unfairly prejudiced, or the demand for the patented product or process is not reasonably met because of the patentee’s failure to:

• Manufacture the product or part of the product to an adequate extent, and supply it on reasonable terms.
• Perform the patented process to a reasonable extent.
• Grant a licence on reasonable terms.

The Intellectual Property Laws Amendments Act 2006 enables a court to grant a compulsory licence if the patentee is acting anti-competitively in contravention of Part IV of the Trade Practices Act 1974 or an application law as defined in Section 150A of that act.

It appears that no compulsory licences have been granted in Australia since federation, nor have many been granted in other countries with similar provisions. However, they have been granted to remedy anti-competitive conduct (in the United States, generally in response to large mergers), to facilitate access to patented medicines (in Zambia, Zimbabwe and Thailand) and in the public interest (Cipro in the United States’ readiness to treat Anthrax in 2001).

Acquisition by Commonwealth
The provisions of Section 171 of the Patents Act allow the government to acquire a patent or patent application with compensation to the patent holder.

There are no guidelines under this section as to the circumstances that must occur before the government may acquire the invention. Circumstances may arise in respect of national security or simply to affect social policy. However, given that there are no reported instances of patent acquisition by an Australian federal government to date, and in view of the conservative nature of the government, this is unlikely to occur other than for national security purposes.

Competition law
One final option exists in the Trade Practices Act 1974 which could be amended to discourage more definitively anti-competitive behaviour by patent holders in relation to public health issues.

Comment
The Senate committee appears unwilling to recommend major changes to legislation to prohibit gene patents when there is so little empirical evidence of there being anything more than a few isolated, albeit highly sensitive, instances of patent holders restricting access to the technology. The inquiry report indicates that politicians would rather that the courts determine the issue of whether genes are patentable subject matter. Only then would there be impetus to amend the legislation accordingly.

For the time being, patent applications should still be filed for isolated and man-modified genes per se, providing that there is a novel and inventive use for the gene and that there is sufficiency of description to support the breadth of the claims. It is very unlikely that man-modified DNA, such as cDNA, or its use in diagnostic and other methods will be prohibited, as such a move would negatively affect the biotechnology industry and likely grind new gene-based medical care to a halt.