12 Feb
2014

Is abolition or greater control of gene patents still on the parliamentary agenda?

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Co-published


The issue of the patent eligibility of genetic subject matter has been on the Australian patent radar since at least 2004, when the Australian Law Reform Commission was the first to publish a report addressing the issue.

In the recent Australian federal election the Liberal National Party (LNP) coalition won power, reflecting the most pronounced community shift to the right from centrist politics in Australia for some years. Notably, some of the new government's key personnel are on public record as being very socially conservative. While the upper house is expected to remain difficult for the new government to navigate successfully until its membership changes in mid-2014, the establishment of a much more conservative Parliament may result in a higher likelihood of success for legislation to exclude gene patents. 

Meanwhile, driven by a financially restricted federal Department of Health, IP Australia and other government-directed institutions have been working to establish economic grounds to change this controversy-wracked area of patent policy.

Key lobbyists in the area may take advantage of this perfect storm of public opinion and economic factors to make renewed attempts to change patent law to limit the patentability of genetic subject matter.

IP Australia seeks to overlay public policy on all patent eligibility decisions
In the lead-up to the election, IP Australia released a consultation paper which sought feedback on:

  • The introduction of an objects clause to the Patents Act 1990.
  • A proposed exclusion from patentability of subject matter in addition to the existing exclusion of 'human beings and biological processes for their generation'.

These proposed amendments to the act are expressly directed at the issue of gene patents and their alleged impact on affordable healthcare.

Introduction of objects clause
The purpose of an objects clause is to provide a context for the Patents Act to assist courts and other stakeholders to interpret the legislation where there may be ambiguity or uncertainty. The two options presented explicitly mention the need for the legislation to promote national interests by balancing the competing interests of patent applicants, patent owners, technology users and Australian society as a whole. IP Australia’s paper acknowledges the need for a patent system to have both economic and social welfare goals. By way of example, it specifically mentions the tension between encouraging the development of technologies which improve quality of life, such as pharmaceuticals and medical technologies, and restricting access to follow-on innovation and the increased costs that can impose. IP Australia’s preferred wording for an objects clause reads:

"The purpose of the patent system is to provide an environment that enhances the well-being of Australians by promoting innovation and the dissemination of technology and by balancing the competing interests of patent applicants and patent owners, the users of technology and Australian society as a whole."

Further exclusions to patentability
Section 50 of the Patents Act enables the refusal of an application for an invention whose use would be contrary to law. However, since no law addresses conservative concerns around gene patents, the proposal seeks to insert a trigger point for action on such concerns by adding an exclusion to patentability for subject matter whose exploitation would be "wholly offensive to a reasonable and informed member of the public". The wording of the proposed exclusion deliberately has the capacity to adapt to the times. Nonetheless, the consultation paper heavily implies that the ethical issues surrounding the patenting of genes are squarely within the intended frame.

It is recommended that the addressee who might determine whether subject matter is wholly offensive be an "ordinary, reasonable and fully informed member of the Australian public". In today's decidedly conservative political environment, it should be considered whether this hypothetical person is now rather more likely to consider genetic technologies "wholly offensive" than was previously the case. In particular, the consultation paper confirms that it is proposed that the commissioner of patents (a government employee) have the power to seek non-binding advice on the most appropriate way to do so. The independence of the public service may be tested if the proposed amendment to the exclusion becomes law.

Submissions in response to the consultation paper may be viewed here. While Australia’s previous government accepted recommendations that an objects clause and further amendments to the patent eligibility were desirable, it is unclear when and whether IP Australia will distil the feedback that it has had and propose legislative changes for the new Parliament to debate and enact.

Opening up access through Crown use and compulsory licensing provisions
In 2013 the Australian Productivity Commission conducted an inquiry into the effectiveness of the compulsory licensing provisions in the Patents Act. Perhaps reflecting the power of socially conservative lobbyists, this report was also focused to a greater degree on enabling access to affordable medical technology, including that which arises from gene technologies.

Against a legislative backdrop in which there have been exceptionally few cases concerning compulsory licences or crown use, the Productivity Commission concluded that there was no economic evidence to support excluding genetic subject matter from patent eligibility. However, it did suggest that more equitable healthcare access is a legitimate governmental concern. The commission proposed further amendments to the Patents Act with the aim of strengthening existing safeguards against the potential for uneconomic restriction to market access that a patent may legitimately cause.

The proposal in respect of the crown use provisions seeks to enable the crown to establish a licence on favourable terms where the crown not only is the recipient of a service, but also has primary responsibility for providing or funding the service. In Australia, through a convoluted mechanism, the federal government provides funding to state governments, which in turn have responsibility for providing healthcare on a local level. In a universal healthcare scheme known as Medicare, the federal government also provides rebates to private individuals for certain medical services such as diagnostic tests. These changes are intended to allow, for example, public hospitals to benefit from the crown’s ability under Section 163 to use a technology without the patentee’s authorisation, albeit on agreed terms.

The commission also recommended changes to the compulsory licensing provisions which would import a public interest test to the existing provisions. At present, Section 133 requires only that the patentee be found to have unsatisfactorily explained the non-exploitation of a patent in circumstances where the public’s reasonable requirements are not being met. Albeit perhaps extreme, it is possible to envisage a scenario in which it is asserted that the public interest lies in low or no-cost royalty access to genetic technologies, and that where this is objectionable to the patentee, a compulsory licence should be established.

The government and IP Australia reacted extraordinarily quickly to the Productivity Commission report. Legislation enacting the proposed changes to the crown use provisions (among others) was introduced to Parliament as the IP Laws Amendment Bill 2013, and passed by the lower House of Representatives on 25th June 2013. Passage of the bill through the Senate was stymied by the calling of a federal election, and only aspects of it have been recently reintroduced. The proposed amendments to the crown use provisions have not been included this time around.

Although the bill was passed by the House of Representatives, parliamentarians representing the incumbent LNP government were in a narrow minority in seeking to prevent its passage. Their major concern was an assertion that the terms would breach Australian obligations under the Australia-US Free Trade Agreement (FTA). Ironically, given that the debate in Australia has concentrated on better and even unrestricted access to technologies based on genes, the US government is highly vocal in trade negotiations in demanding terms which enable the monopolisation of as much innovation as possible through IP mechanisms.

Where to from here?
Set against this legislative debate, the Full Court of the Federal Court of Australia has been strangely silent in D’Arcy v Myriad Genetics (NSD 359/2103). This is the legal case taken by Cancer Voices of Australia which, to the extent possible, mimicked the case finally decided by the US Supreme Court in Association for Molecular Pathology v Myriad Genetics, Inc, in which a group of passionate lobbyists sought to overturn Myriad Genetics’ US patents to the BRCA1 and BRCA2 genes and the diagnostic tools using them. In that case, the lobbyists were largely unsuccessful, with the court determining that only claims to cDNA were invalid. The Federal Court adjourned in August 2013 to hand down its decision, which – by all reports and based on the careful reasoning of the lower court – ought to have been straightforwardly in support of the patent eligibility of the claims in Australia. 

After June 2014 the Senate of the Australian Parliament will have a conservative majority – albeit one not totally made up of LNP senators. In fact, the cross-benches may be populated by an even more conservative polyglot of largely single-issue parties which, it is expected, will lean even further to the right on matters such as gene patents than the LNP. The establishment of a smooth, socially conservative legislative pathway through Parliament may see an attempt at bringing in an objects clause and further exclusions to patentability to the Patents Act, as well as more refined changes to the crown use and compulsory licensing provisions. While there is no doubt that the LNP needs to balance its desire to meet international obligations – including those imposed by the Australia-US FTA, and even possibly the forthcoming Trans-Pacific Partnership agreement – political expediency can sometimes lead to surprising conclusions, especially when the public wind is behind the metaphorical sails of a political power in the ascendancy.

For further information please contact:

Karen Sinclair
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This is a co-published article whose content has not been commissioned or written by the IAM editorial team, but which has been proofed and edited to run in accordance with the IAM style guide.