Australia breaks new ground with genetic patentability ruling

In an October 7 2015 decision, the Australian High Court unanimously concluded that Myriad Genetics’ patent claims for isolated gene sequences, including mutations in the BRCA1 gene, did not involve patentable subject matter and were therefore invalid. In doing so, it unanimously overturned earlier decisions of the Federal Court trial judge and an expanded five-judge bench of the Full Federal Court. The result is consistent with that reached by the US Supreme Court in similar proceedings.

The decision creates new law in Australia for assessing whether a claimed invention constitutes ‘patentable subject matter’ (defined as whether it involves a “manner of manufacture”). However, the decision is practically limited to the particular claims of Myriad Genetics’ patent and therefore does not resolve the question of whether similar patents will suffer the same fate in future.

Validity challenge

The three claims of the patent considered by the court concerned a nucleic acid coding for a BRCA1 protein, with one or more specified variations from the norm in its nucleotide sequence, isolated from its cellular environment. If present, the mutations in the BRCA1 gene would indicate a predisposition to breast and ovarian cancer.

The claims were challenged on the basis that as isolated gene sequences are naturally occurring, their isolation would not make them sufficiently artificial to constitute patentable subject matter.

Existing test for manner of manufacture

Myriad Genetics argued that the claims satisfied the test for patentable subject matter set out in the High Court’s 1959 decision in NRDC v Commissioner of Patents – namely, that the subject matter of the claims is a manner of manufacture:

• directed to an artificial state of affairs; and
• in a field of economic endeavour.

The majority found that, while expressed as product claims, the essence of the claims was not the isolated nucleic acid itself, but the information in the genetic sequences it contained. Because such information was neither made nor a process, it was not brought about by human action; therefore, the court considered that the claims were not directed to an artificial state of affairs.

Reformulated test

The majority stated that the court’s decision in NRDC was not intended to be an exhaustive formula for assessing manner of manufacture (notwithstanding that it has effectively been treated in that manner by the Patent Office and the Federal Court for decades), and that “artificial state of affairs” and “economic utility” are not the only relevant considerations.

Instead, the majority emphasised the court’s authority to develop the concept of ‘manner of manufacture’ on a case-by-case basis and identified a number of additional relevant factors, which included the following:

• whether patentability would be consistent with the purposes of the Patent Act – including any negative effects on innovation or a so-called ‘chilling effect’ on broader activities – and whether there were conflicting public and private interests and purposes;
• the effect of the decision on the coherence of the law relating to patentability;
• Australia’s obligations under international law and in the context of other countries’ patent laws; and
• whether allowing patentability for the claimed invention would be law making of a kind best left to Parliament.

In fact, the court identified the first, second and fourth factors as being of primary importance (compared to the third factor and the two factors in the NRDC test), and suggested that any one of those three factors may well suffice for a patent to be declared invalid.

Applying these factors, the court concluded that allowing Myriad Genetics’ patent could result in a chilling effect on legitimate innovation outside the boundaries of the formal monopoly granted by the patent. In addition, allowing the patent was not necessary under the present law; nor was it required in order for Australia to meet its international obligations or the laws of its trading partners.

Implications for Australian patent law

The decision significantly expands the considerations relevant to determining whether claimed subject matter is patentable. This appears to require that the Patent Office and Federal Court take into account policy considerations typically applied only by the High Court, potentially on a patent-by-patent basis.

If assessed by the lower courts and the Patent Office, it is unclear what evidence will be required to address the High Court’s additional factors and whether further factors might be accepted as relevant. This suggests that manner of manufacture will assume greater importance in challenging the validity of patents in certain fields of evolving technology.

The High Court was at pains to emphasise that its decision did not relate to gene patenting generally, but was limited to the disputed claims. Nevertheless, patent applications claiming nucleic acid sequences will now be more susceptible to challenge. While the Patent Office has released a draft approach to assessing the validity of such claims in light of the High Court’s decision, even that guidance is likely to lead to further disputes.

Ultimately, the High Court indicated that it is incumbent on Parliament to legislate specifically if it intends nucleotide sequences derived from human DNA – as claimed in Myriad Genetics’ patent – to be patentable subject matter. Therefore, we expect to see further policy debate about whether such a step is necessary and, if so, what form any legislative changes should take.