What is patentable in Australia? The ACIP reports

Recent public debate on patentability in Australia and other jurisdictions has focused on genetic materials, computer software and business methods. The Australian Advisory Council on Intellectual Property (ACIP) has recently released its report on patentable subject matter. The review undertaken arose from a recommendation made by the Australian Law Reform Commission in 2004 when it stated that “manner of manufacture”, the key concept of patentable subject matter in Australia, was ambiguous and obscure.

However, the scope of the review was not limited to those particular fields highlighted in the current debate. Nor was it limited to consideration of “manner of manufacture”, because of the significant overlap between “manner of manufacture” and other criteria for patentability. There are no recommendations which would, if implemented, significantly alter the patentability landscape in Australia and no new specific exclusions to patentability have been introduced.

The ACIP sought submissions from stakeholders and also held public consultations around Australia. The report and associated documents can be accessed at www.acip.gov.au.

Patentability in Australia
Current patentability standards in Australia are based on the Statute of Monopolies, which dates from 1623 UK law. An "invention" is defined as "any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies 1623 and includes an alleged invention". The High Court decision in National Research Development Corporation v Commissioner of Patents ([1959] HCA 67; (1959) 102 CLR 252 (16th December 1959)) and subsequent decisions have created a body of law that is still used when patentability is considered. This law requires that the subject matter of a patent be an artificially created state of affairs in the field of economic endeavour. It cannot be a discovery, fundamental concept or principle – there must be some useful product, physical phenomenon or effect resulting from the working of a method.

The ACIP considers that the drafting of Section 18 of the Patents Act 1990 (Cth) and the definition of an "invention" have lead to a lack of clarity. The ACIP also considers that there is uncertainty about the "general inconvenience" proviso that arises from the Statute of Monopolies. Therefore, the ACIP has suggested that Australia needs a patentability standard which takes the desired economic outcomes of the patent system into account, but which also allows for consideration of ethical concerns.

The key recommendations are directed to:

• Codifying the established principles of patentability – an invention must be an artificially created state of affairs in the field of economic endeavour.
• Maintaining the current exclusion from patentability of human beings and biological processes for their generation – but not introducing any further specific exclusions. 
• Introducing a general exclusion from patentability of inventions whose commercial exploitation would be wholly offensive to the Australian public.

Recommendations 1 and 2

"Recommendation 1 – Include a statement of objectives in the Patents Act 1990 (Cth) describing the purposes of the legislation which - Recommendation 2 - should describe the purposes of the legislation as being to provide an environment that promotes Australia’s national interest and enhances the well-being of Australians by balancing the competing interests of patent rights holders, the users of technological knowledge and Australian society as a whole."

The ACIP considers that the inclusion of a statement of objectives in the Patents Act would clarify the interaction between the patent system and competition policy, and would also bring Australian patent legislation into line with other Australian legislation which includes objective statements. Furthermore, the ACIP considers that the test for patentable subject matter must be interpreted in the context of the objectives of the legislation, and suggests that this interpretation will be assisted by such a statement.

Recommendations 3, 4 and 5

"Recommendation 3 – Define patentable subject matter in the Patents Act 1990(Cth), for the purposes of both a standard patent and an innovation patent, using clear and contemporary language that embodies the principles of inherent patentability as developed by the High Court in the NRDC case and in subsequent Australian court decisions. Recommendation 4 – Amend the Patents Act 1990(Cth) to enhance the clarity of the patentability requirements, and to remove overlap of the patentable subject matter provision with the provisions on novelty, inventive step and usefulness. Recommendation 5 – Amend the Patents Act 1990(Cth) so that the requirement of usefulness in paragraphs 18(1)(c) and 18(1A)(c) encompasses the requirement for utility that is currently an aspect of the manner of manufacture requirement, and is a ground for examination of a standard patent and an innovation patent."

These recommendations are directed at providing a definition of "patentable subject matter" with reference to economic matters. It is suggested that the language used in Section 18 should refer to “an artificially created state of affairs in the field of economic endeavour”. The ACIP indicated that this is not intended to change the substance of the test for inherent patentability in Australia, but is merely intended to restate the law in the words that are currently applied by the courts.

Of course, the risk with this approach is that a change in the wording may lead to a perception that there has been a change in meaning. It will also result in the removal of the need to include consideration of ethical issues when considering patentable subject matter. This is a positive step that makes the test clearer and more specific.

Recommendations 6 and 7

"Recommendation 6 – Retain the specific exclusions set out in subsections 18(2) and 18(3) of the Patents Act 1990(Cth). Recommendation 7 – Repeal section 50 of the Patents Act 1990(Cth), and the corresponding grounds for revocation of an innovation patent contained in section 101B of the Patents Act 1990(Cth)."

The legislation currently excludes from patentability: 

• Human beings and the biological processes for their generation.
• Plants and animals and the biological processes for the generation of plants and animals (for the purposes of the innovation patent only). 

The ACIP considers that there is no need to expand the list of specific exclusions, and furthermore proposes deleting the separate consideration of whether the following are patentable:

• An invention whose use would be contrary to law. 
• An invention which is a substance that is capable of being used as food or medicine and is a mere mixture of known ingredients or a process for producing such a substance by mere admixture.

It is suggested that these criteria would be considered within the scope of inherent patentability.

These recommendations are not controversial, and the ACIP also stated that there were no persuasive arguments presented to it suggesting that a specific exclusion to prevent the patenting of human genes and genetic products was necessary.

Recommendations 8, 9 and 10

"Recommendation 8 – Include in the Patents Act 1990(Cth) a patentability exclusion as permitted by Article 27(2) of the TRIPS Agreement. Recommendation 9 – Amend the Patents Act 1990(Cth) so as to exclude from patentability an invention the commercial exploitation of which would be wholly offensive to the ordinary reasonable and fully informed member of the Australian public. Recommendation 10 – Amend the Patents Act 1990(Cth) to provide the Commissioner of Patents with an explicit power to seek advice, from any person the Commissioner considers appropriate to assist the Commissioner in applying the general patentability exclusion proposed in Recommendations 8 and 9."

The ACIP considers that there should be a general exclusion to patentability based on ethical grounds. As it proposes to remove the reference to Section 6 of the Statute of Monopolies, which specifies that patents are available for any manner of new manufacture, provided that it is neither “contrary to law nor mischievous to the state by raising prices of commodities at home or hurt of trade or generally inconvenient”, the intention of these recommendations is to provide a route for refusing a patent on ethical grounds. It is expected that these ethical grounds will change over time in accordance with changes in Australian society and therefore the bases for such objections are not suggested. Given that very few patent applications that would fall within this category, it is unlikely that this change will have a significant impact.

Recommendation 11

"Recommendation 11 – Amend the Patents Act 1990(Cth) to require the Commissioner of Patents to be satisfied that an invention is a patentable invention before accepting an application for a standard patent or certifying an innovation patent."

The intention of this recommendation is to ensure that the Commission of Patents applies the same standard to:

• Determining whether an invention satisfies the patentability requirements of novelty, inventive step and innovative step.
• Determining whether an invention satisfies other patentability requirements (eg, patentable subject matter).

The balance of probabilities test will be maintained when considering novelty, inventive step and innovative step. The balance of probabilities test will replace the current benefit of the doubt test for all other patentability standards. This is a sensible approach to simplifying the system and will lead to a stronger patent system.

Next steps
The Australian government is considering the report and will provide its response in due course.