A raft of changes for intellectual property in Australia

A raft of changes for intellectual property in Australia

A raft of changes for intellectual property in Australia

Article republished from MIP Intellectual Property Focus 2013 publication: Managing IP talks to Davies Collison Cave about the biggest cases and legislation in Australia, and how they will affect IP owners

What is the status of gene patents in Australia?

Tania Obranovich (TO): The BRCA patents, which claim the BRCA DNA molecules, have courted significant controversyin Australia. Specifically, theAustralian licencee’s attempt tocentralise BRCA diagnostic testing in-house caused great public concern and triggered the establishment of twoSenate enquiries into the impact of granting gene patents. Federal Court litigation was subsequently initiated by Cancer Voices Australia to formally challenge the patentability of the claims to the isolated BRCA nucleic acid molecules. Both Senate enquiries and the Federal Court were required to consider the central question of whether or not genes should remain patent-eligible subject matter.

As it stands, isolated nucleic acid molecules remain eligible for patents in Australia. The Senate enquiry reports recommended focusing on a technology-neutral approach to patentability. Specifically, the enquiry promotes the existence and application of patentability thresholds consistent with international standards, while simultaneously working with the safeguards, which are already present in the Australian Patents Act to control how a patent right is exercised.

Unlike the government approach, which focused on broader policy issues, the Federal Court has recently considered the legal question of whether isolated nucleic acid molecules give rise to the so-called artificial state of affairs, which is the threshold that must be met in Australia for subject matter to be patentable. To this end, the Court has held that an isolated nucleic acid molecule is patentable, even where the sequence of this molecule is the same as the sequence of the native molecule that is present in the 2 body.

This decision is based on the Court’s view that the removal of nucleic acid material from its natural environment, and its separation from other cellular components, gives rise to the necessary artificial state of affairs. This decision is currently under appeal.

What legal issues do you think will be important in the Myriad appeal?

TO: The appeal in respect of Cancer Voices Australia v Myriad Genetics will reconsider the central question as to whether isolated nucleic acid molecules meet the patentable subject matter threshold which applies in Australia. Specifically, under the principles set out by the High Court in the NRDC case, a technology must be a “manner of manufacture”. This is satisfied where the technology consists of an “artificially created state of affairs” which has “economic significance”.

The issue of economic significance has never been in dispute. Rather, Cancer Voices argued at first instance that there was no material difference between the claimed isolated nucleic acid BRCA molecule and the corresponding nucleic acid molecule in its natural state within the human body. However, the Court held that whether the invention was a “product of nature” or “markedly different” to something that already existed in nature was not the relevant question. Rather, even if the physical properties of the material had not changed, the removal of the material from its natural environment, due to human intervention, gave rise to 3 the necessary artificial state of affairs.

It is in respect of this issue that the appeal is likely to turn. However, it is of some interest to note that the Judge at first instance did indicate that his decision was consistent with parliamentary intentions, Australia Patent Office practice and the legal position in the UK and Europe. Whether or not these issues will also form part of the deliberations of the appeal court cannot be known. However, when one considers that subsequently to this decision, the US Supreme Court unanimously held, in AMP v Myriad, that naturally occurring DNA molecules are not patentable subject matter, any such consideration of the law of other jurisdictions may be significant.

How will changes to the definition of a useful invention (section 7A) affect patentability? What do filers need to do?

Michael Caine (MC): The new definition of useful appearing in section 7A compliments the substantive utility requirement which appears in section 18(1)(c). The new provision is effectively a disclosure requirement,
which would perhaps be better placed within section 40, where other specification and disclosure requirements are set out. The new requirement is not expected to change
the way inventions are described in patent specifications, since patent attorneys routinely disclose inventions in a manner which allows the utility of the invention to be appreciated by a person skilled in the relevant art. Section 7A clarifies that the use must be specific, substantial and credible, words which will no doubt be clarified in subsequent decisions of the Federal Court.

What other provisions from Raising the Bar should patent filers be aware of?

MC: While patent filers should familiarise themselves with all changes introduced by the Raising the Bar Act, the most substantial changes relate to the level of description of an invention required to be included in the patent specification to support the claims. Not only must the description provide an enabling disclosure of an invention across the breadth of the claims, but the claims must also be fully supported by the description; the description must provide a basis for the claims, and the claims must not be broader than justified by the extent of that description and the contribution the invention makes to the art. It is also important for any application from which an Australian application claims priority, to provide an enabling disclosure of the invention across the breadth of the claims. It is expected that these provisions will lead to the grant of claims of narrower scope than allowed under the previous law.

How about changes to the trade mark opposition proceedings? How should rights holders change their approach?

Michael Wolnizer: The first thing trade mark owners should do is to implement an Australian watching service, assuming one is not already in place. The reason for this is
that the time period to file a notice of opposition has been reduced from three months to two months, and the ability to obtain an extension of time to file a notice of opposition on the grounds that further research is required, has been removed.

Once a notice of intention to oppose is filed, the opponent must file a statement of grounds and particulars (SGP) within one month. Accordingly, trade mark owners need to devise a strategy for the opposition as early in the process as possible and investigate all potential grounds of opposition before the SGP is filed. It will only be possible to add a ground of opposition at a later date if the addition arises from information that the trade mark owner “could not reasonably have been aware of at the time the SGP was filed “.

There is also a new regime for extensions of time to file evidence, and it is likely that extensions will be much more difficult to obtain. Accordingly, trade mark owners need to set an evidence strategy early in the proceeding and have a timetable for completion of the evidence.

Finally there is a trap for owners of international registrations designating Australia (IRDAs). In particular, if an opposition is filed against an IRDA, then the holder must file a notice of intention to defend opposition (NoI) within one month from the day the registrar notifies the International Bureau of the opposition. If the NoI is not filed then the application lapses. Owing to delays inherent in the Madrid system, it is important for IRDA holders to nominate an Australian address for service early on in the IRDA process.

The Pharmaceutical Patents Review Panel released its draft report in April criticising certain aspects of the patent system. What are some of the major issues raised in the report, and do you believe it will lead to legislative action on this issue?

MC: While the draft report contained a number of recommendations for amending Australian patent law to make Australia a more attractive place for investment by the generic pharmaceutical industry, it is unclear whether any of these recommendations will actually lead to legislative action. There are a number of reasons for this, including the manner in which the review was conducted. Unfortunately the panel appointed 4 to carry out the review was perceived to be heavily biased towards the generic pharmaceutical sector, a bias that is evident in the Issues Paper released by the panel, and a draft report. The timeframes given to the panel for carrying out their review were unrealistic, and did not allow sufficient time to gain a full appreciation of the relationship between patents and patent terms, and investment decisions made by the research-based pharmaceutical sector. It is hoped that the pharmaceutical patent system will be given further balanced consideration, and that any legislative action will factor in the concerns of the research-based pharmaceutical sector.

Are there any IP-related cases rights holders should keep an eye on in the next 12 months?

Ian Pascarl: On August 7 2013 a five-Justice Full Federal Court bench consisting of Chief Justice Allsop, and Justices Dowset, Kenny, Bennett and Middleton began hearing the appeal by Cancer Voices Australia and Yvonne D’Arcy against the finding at first instance by Justice Nicholas in favour of Myriad that:

  • the isolation of nucleic acid resulted in “an artificially created state of affairs” that is of economic significance as defined in National Research Development Corporation v Commissioner of Patents (NRDC case); and
  • was therefore a manner of manufacture within the meaning of section 6 of the Statute of Monopolies as required by section 18(1)(a) of the Patents Act 1990; and
  • consequently valid patentable subject matter.

Doubtless in the course of argument the Full Federal Court’s attention will be drawn to the decision of the United States Supreme Court in Association of Molecular Pathology v Myriad Genetics (US Myriad) and the position taken by the European Patent Office and the European Court of Justice.

Under US law, discoveries, laws of nature, natural phenomena and abstract ideas are not patentable subject matter. The Supreme Court
found in US Myriad that DNA molecules isolated from their natural state by known techniques are excluded from patentability because they fall within the laws of nature exclusion, but that artificially synthesised molecules do qualify for patent protection.

In Europe, biological material that is isolated from its natural environment, or produced by means of a technical process, may be the subject of an invention, even if it previously occurred in nature, subject to meeting other patentability requirements. However, a recent European Court of Justice decision would seem to have imposed a limitation that the scope of the claims to isolated. DNA is limited to products in which the isolated DNA performs its function.

We consider it unlikely that the Australian Full Federal Court will be persuaded to overturn Justice Nicholas’ decision based upon the arguments made in the US proceeding. In particular, we consider the argument that gene patents are the result of a discovery and not an invention will be rejected because of the way in which the issue was considered by Justice Nicholas in the context of the NRDC case. This is also particularly so when it is recognised that DNA and RNA, unlike human beings and the biological processes for their generation, are not expressly non-patentable under the Act.

We also think it highly likely that a further application for special leave to appeal, and any appeal to the High Court as a consequence of a successful leave application, would result in Justice Nicholas’ decision being upheld.

However, the general subject of gene patenting has been a vexed issue in Australia generating a number of public enquiries and reports. Indeed, IP Australia has only recently requested submissions on whether or not the Act should introduce a broad exclusion from patentable subject matter of “an invention, the commercial exploitation of which would be wholly offensive to the ordinary reasonable and fully informed member of the public”. Doubtless gene patenting will again be the subject of submissions due on September 27 2013 in response to this reference. Accordingly, although we think it likely that the court appeal process will ultimately conclude with isolated nucleic acid being patentable, it is possible, although unlikely, that an amendment to the Act could be made adopting, for example, the European limitation or some other limitation on the patentability of gene sequences.

Depending on the outcome of Cancer Voices, or any subsequent legislative intervention, is the very important issue of whether innovators will continue to make extensive investment in developing products such as diagnostic testing kits and other medical care products because they know they can recoup their investment, and make a meaningful profit as a consequence of patent protection.

Australia is also looking into updating the Copyright Act, and the Australia Law Reform Commission (ALRC) put out a report with a number of suggestions, such as implementing a US-style fair use regime. What are your thoughts on the reforms suggested in the report, and how will they affect rights holders?

Darron Saltzman: As part of its inquiry into whether the exceptions and statutory licences under the Copyright Act 1968 (Cth) are adequate and appropriate in the digital environment, the ALRC has issued a Discussion Paper containing 42 proposals.

The ALRC has proposed the repeal of a range of the existing exceptions to copyright infringement, including the fair dealing and professional advice exceptions, and the introduction of a broad and flexible fair use exception to copyright infringement. The proposal does not contemplate a definition in the legislation for the term fair. Rather, determining whether a particular use of copyright material is fair will be determined on a case by case basis, and involve a consideration of a list of fairness factors, including:

  • the purpose and character of the use;
  • the nature of the copyright material used;
  • where only part of the copyright material is used – the amount and substantiality of the part used, considered in relation to the whole of the copyright material; and
  •  the effect of the use upon the potential market for, or value of, the copyright material.

The new fair use exception will be open ended, and all existing fair dealing purposes – apart from professional advice – will be included with other non-exhaustive illustrative examples of the new fair use exception. These include:

  • research and study;
  • criticism and review;
  • parody or satire;
  • reporting news;
  • non-consumptive use;
  • private and domestic use;
  • quotation;
  • education; and
  • public administration.

It remains to be seen whether any additional uses or purposes will be included.

The danger for rights holders lies in the fairness factors being unduly influenced by social norms and user expectations, at the expense of the creator’s rights consistently applied over time and firmly entrenched under the Berne Convention.

Some of the other ALRC proposals include:

  1. The repeal of the statutory licence provisions. Governments, educational institutions and institutions assisting persons with a print disability wanting licences for the use of copyright material would need to negotiate them. This proposal has the potential to favour rights holders, replacing the current position where rights holders must accept the right of certain third parties to use its works, receiving only an imposed amount as equitable remuneration. However, given the non-exhaustive list of illustrative purposes in the context of the proposed fair use exception, it may be that rights holders are ultimately worse off. For example, if government or educational institutions’ use of copyright works is subsumed within the public administration or education examples.
  2. Two options for dealing with the existing exception to broadcast copyright as it applies to the retransmission of free-to-air broadcasts (i) repeal the exceptions and leave the matter solely to negotiations between the parties (favouring rights holders); or (ii) repeal and replace with a statutory licence (favouring users). The ALRC has also proposed that broadcasts would also be extended to retransmission over the internet.
  3. Rendering ineffective provisions in an agreement that excludes or limits certain copyright exceptions (libraries and archives and fair use/fair dealing involving use of material for research or study, criticism or review, parody or satire, reporting news or quotation). Whilst the ALRC cites the grounds of public interests protected by the particular exceptions for the proposal, the proposal places these public interests above the interests of the relevant copyright holders and above the role of freedom of contract for the contracting parties.

Contracting out may avoid concerns over the potential uncertainty of scope and reach of these exceptions.

The success of any copyright law reform lies in balancing the competing interests of (i) authorship and incentive to create, and (ii) promoting fair access to and wide dissemination of content. The robustness and longevity of any reform relies on its ability to be flexible and adaptive to new technologies. Technological neutrality in the law and adaptability should not, however, produce uncertainty either for rights holders or content users. The open-ended and generalised approach of the fair use exception invites unpredictability and potential uncertainty of application for all concerned.

That said, the ALRC is to be commended for 6 its efforts so far.