Genes and Ingenuity

Genes and Ingenuity: Gene Patenting and Human Health (ALRC 99, 2004) is the culmination of a major inquiry by the Australian Law Reform Commission (ALRC). The Report, which contains 50 recommendations for reform, is the product of an extensive research and community consultation effort over 18 months.

The Terms of Reference directed the ALRC to consider—with a particular focus on human health issues—the impact of current patenting laws and practices related to genes and genetic and related technologies on:

• research and its subsequent application and commercialisation;
• the Australian biotechnology sector; and
• the cost-effective provision of healthcare in Australia.

Given the diversity of interests and concerns encompassed by these three areas, the ALRC’s task was a complex and delicate one. For example, reforms that might facilitate access to genetic inventions to assist healthcare providers and researchers could adversely affect the growing Australian biotechnology sector and the development and marketing of new healthcare products.

The impetus for the Inquiry came from within the ALRC and from external events. The ALRC and the Australian Health Ethics Committee (AHEC)—in their two-year inquiry into the protection of human genetic information—identified a range of related intellectual property issues of concern (see Essentially Yours: The Protection of Human Genetic Information in Australia, ALRC 96, 2003). However, the Terms of Reference for that inquiry did not extend to a full examination of these complex issues; nor were the time and resources available to do them justice. The ALRC suggested instead that gene patenting would be a suitable topic for a fresh inquiry under dedicated Terms of Reference.

Around the same time, health officials in Australia and overseas were expressing growing concern about the implications of gene patents and licences for the cost of and access to healthcare. Of special concern was the behaviour of one United States company—Myriad Genetics Inc (Myriad)—which holds patents over methods and materials used to isolate and detect mutations in two genes that may indicate a predisposition to breast and ovarian cancer (BRCA1 and BRCA2). The concerns, especially in Europe and Canada, related to the breadth of the patents and to the manner of their exploitation. In particular, Myriad had proposed licence conditions that would have required testing laboratories to send DNA samples to its laboratories in the United States for sequencing. Concerns centred on the price proposed by Myriad for the tests (up to three times those charged by laboratories in Europe and Canada); the quality of the tests; the potential loss of research expertise and data; and the separation of clinical services from research and counselling.

In Australia, Myriad licensed its BRCA1 patents to an Australian company, Genetic Technologies Limited (GTG). GTG announced during the course of the ALRC’s Inquiry that it was not proposing to charge a licence fee for BRCA1 testing by public sector laboratories, nor would it require that all BRCA1 testing in Australia be conducted at its laboratories. Nevertheless, concerns remained within the health sector that other companies holding patents over genes associated with predictive and diagnostic testing would, in time, replicate the behaviour of Myriad.

Concerns also were being expressed within the research community about the possible need to obtain licences for the use of patented genetic inventions in research. In a high profile decision in the United States, Madey v Duke University,^[1]it washeld that the experimental use defence was very narrow and not available to an organisation, such as a university, conducting research as part of its legitimate business. Critics of the decision argued that it could have a ‘chilling effect’ on academic research.

In Australia, the Patents Act 1990 (Cth) (Patents Act)does not expressly exempt experimental or research use of patented inventions from liability for infringement. However, in practice, patent holders generally do not seek licence fees from researchers using patented inventions in their research, except in those circumstances where the fees are incorporated into the cost of purchasing a research tool or other product, or where the research is for commercial purposes. During the Inquiry, GTG revealed that it was asking some research institutions to take out a licence for research using its patented method for the use of non-coding DNA.

The question of whether to recommend a statutory exemption for research or experimentation became a key issue for the Inquiry. It exemplified the complex nature of the ALRC’s task. Researchers in Australia are encouraged to commercialise their research, based on a policy that this is the best way to encourage innovation. Australia’s growing biotechnology sector is dominated by small and medium-sized enterprises, many of which originated in universities or other publicly funded research organisations, and whose major assets include intellectual property in genetic research tools. If there were a statutory exemption for research use, then these assets would be of little economic value and incentives to develop new products would be eroded. On the other hand, there are legitimate concerns about the time and cost needed to negotiate licences, and about the impact that this could have on further research and development.

The ALRC consulted widely in the course of the Inquiry. It released two major consultative documents: an Issues Paper (IP 27, July 2003) and a Discussion Paper (DP 68, February 2004). After the release of each, the ALRC conducted targeted consultations with key stakeholders and experts. In all, there were 73 meetings, involving hundreds of individuals from government, industry, academia, the legal profession and the health sector. A total of 119 written submissions were received.

The Inquiry was concerned with two broad areas: the patenting of genetic materials and technologies, and the exploitation of these patents. The Terms of Reference directed the ALRC to have regard to ‘the objective of the protection of intellectual property rights to contribute to the promotion of technological innovation’. The Inquiry was concerned to examine whether the Australian patent system was meeting the challenges of the rapidly developing science associated with the sequencing of the human genome. In Australia and overseas, views were expressed that patent systems had not coped well with developments in genetic technologies. The Inquiry heard a broad range of concerns, which included that patents legislation fails to take sufficient account of ethical considerations; that some gene patents are too broad or too readily granted; and that insufficient usefulness or utility is required to be demonstrated to support a claim over a genetic invention.

One frequent concern was that claims over genetic sequences should not be patentable because the sequences—being naturally occurring—are ‘discoveries’, not inventions. Whatever the merits of that argument, the Inquiry was faced with the fact that since the 1980s—in Australia and internationally—large numbers of patents have been granted on genetic sequences, provided they have been isolated from their natural state and otherwise satisfy the statutory requirements for patentability. The Inquiry ultimately concluded that if there had been a time to recommend that gene sequences should not be patentable, that time had long since passed. Rather, it was preferable to focus on reforms that would make the system work better.

Many submissions considered the manner in which a patent holder or its licensee exploits gene patents in the marketplace. During the course of the Inquiry, it became apparent that the behaviour of a small number of patent holders or licensees generated more general concerns about the impact of gene patents and licences. Many of the concerns expressed were anecdotal or hypothetical, and evidence of problems in practice—outside a small number of well-known examples—was more difficult to find. The Inquiry faced the task of recommending reforms that would help the patent system deal with errant behaviour, without stifling future innovation and investment in genetic technologies and the development of the Australian biotechnology industry.

The Inquiry was not directed to undertake a general review of the patent system in Australia. Nevertheless, it became apparent that often it was neither possible nor appropriate to suggest reforms directed solely at the patenting of genetic materials and technologies. To the extent that gene patents highlight any deficiencies in the patenting system generally, it was preferable to direct reforms towards correcting systemic weaknesses to ensure that the system is robust enough to anticipate and respond to future problems. Further, to propose specific laws for genetic materials and technologies may have had implications for Australia’s compliance with obligations under various international trade agreements. As a result, some of the recommendations are aimed at improvements in the patent system in general, including a suite of reforms directed at patent office practice. Others are directed to the appropriate use and exploitation of gene patents and to the relationship between the patent system and the three sectors to which the ALRC is required to have regard—research, biotechnology and healthcare. A number of recommendations encourage greater utilisation of existing mechanisms within the Patents Act and Trade Practices Act 1974 (Cth).

Shortly before the Inquiry concluded, the European Patent Office ruled, in opposition proceedings, that Myriad’s patent on the BRCA1 gene in Europe was not valid because it lacked an inventive step. It is not always appreciated that, in granting a patent, a patent office is not making a final determination about the validity of the patent. Such a determination is for the courts, if and when a patent is challenged. One of the key recommendations of this Report is that health departments should consider more actively and strategically whether to exercise any existing legal options—including challenging patents—in order to facilitate access to particular genetic inventions where gene patent applications, granted patents or patent licensing practices are considered to have an adverse impact on medical research or the cost-effective provision of healthcare.

The ALRC has adopted a nuanced approach to reform, which recognises both the generality and longevity of the patents system, on the one hand, and the new challenges generated by human genetic science and technology, on the other. There are many different points at which the patent system might be reformed to address the actual and anticipated problems posed by the patenting of genetic materials and technologies. This does not mean that reform must be sought at every point, but rather that intervention—where needed—should be directed to those areas in which it will be most effective. This Report describes the complexities of the Australian patent system and explains the ALRC’s views about the desirability of reform in dealing with problems generated by developments in genetics.

The Report makes important recommendations for reform but it does not suggest any radical overhaul of the patents system. Specific reforms are directed to:

· improving patent law and practice concerning the patenting of genetic materials and technologies, including through amendments to the Patents Act and changes in the practices and procedures of IP Australia, patent examiners and the courts;

• improving patent law and practice concerning the exploitation of gene patents, including in relation to a new defence to claims of patent infringement, Crown use, and compulsory licensing of gene patents;
• ensuring that publicly funded research, where commercialised, results in appropriate public benefit, including through the adoption of appropriate patent practices;
• encouraging universities and other research organisations to raise the awareness of researchers about patenting issues and the commercialisation of research;
• ensuring that Australian research organisations and biotechnology companies are adequately skilled to deal with issues concerning commercialisation and the licensing of patented inventions;
• establishing mechanisms for monitoring the implications of gene patents for research and healthcare so that governments have the ability to intervene where gene patents are considered to have an adverse impact, either in specific cases or systemically;
• clarifying the application of competition law to the exploitation of intellectual property rights, including patented genetic materials and technologies; and
• clarifying the scope and practical application of exceptions to copyright infringement in relation to research.

Most of the recommendations do not require legislative change, but involve the development of new or revised guidelines, or other action by government and non-government bodies involved with various aspects of the patent system or its impact on research, biotechnology, or healthcare. For this reason, the Report contains an ‘Implementation Schedule’, making clear the lines of responsibility for implementing the various recommendations.

During the life of this project, the Advisory Council on Intellectual Property (ACIP) initiated two inquiries that overlapped with aspects of the ALRC’s Inquiry: a review of patents and experimental use; and a review of the Crown use provisions in patents and designs legislation. The report from each ACIP inquiry is expected in late 2004. Given the ALRC’s timetable for reporting, it has not been possible to take ACIP’s recommendations into account in formulating the final recommendations in this Report, although the ALRC has held discussions with ACIP about common issues.