The report states that -
The committee notes that the Bill has been introduced in the context of a number of other reviews and other ongoing processes. IP Australia has recently finalised over two years of consultation in relation to the reforms which have been introduced as part of the Raising the Bar Bill. Legal cases related to the patentability of human genes are also currently being undertaken, both in Australia and overseas. Australian Government responses are also anticipated in relation to:The report goes on to comment that• the report of the ALRC inquiry on gene patenting and human health;These events will be relevant to the broader issues identified in the [Explanatory Memorandum] as being affected by the Bill.
• the report of the Senate Community Affairs Committee inquiry on gene patents; and
• the report of the ACIP inquiry on patentable subject matter.
In the view of the committee, the key issues to be addressed regarding the provisions of the Bill and the issue of the patenting of human genes and biological materials are:• the distinction between discoveries and inventions;
• the scope of the Bill's exclusion for biological materials;
• access to treatments, diagnostics and methods for healthcare;
• the freedom to conduct research;
• investment in research and development;
• access to new products and knowledge;
• ethical issues with respect to the patenting of human genes and biological materials;
• the crown use and compulsory licensing provisions of the Patents Act; and
• international considerations.
The Bill before the committee attempts to make amendments to the Patents Act in order to clarify the distinction between invention and discovery in the patents system. However, it is evident from the inquiry that there is not wide agreement that the amendments proposed facilitate this clarification. In the view of the committee, the amendments proposed in the Bill will, at best, not assist to clarify the distinction between discovery and invention in the patent system and, at worst, make the distinction more obscure.The report notes that ACIP concluded after an extensive inquiry into patentable subject matter that -
The inquiry touched on several of the difficult policy questions regarding the appropriate distinction between discovery and invention in relation to patents over human genes and biological materials. However, these difficult policy questions are not limited to these particular subject matters. Other controversial areas include the grants of patents over computer software and business methods. Further, there are likely to be new fields of technology in the future where the issue of the appropriate distinction between discovery and invention will need to be carefully considered. This indicates to the committee that a technology neutral approach to this issue is preferable to an approach which will focus on one category of inventions only.
The current test for patentable subject matter as applied by the courts in Australia is the best one available to us. It has the flexibility to cope with a variety of concepts and to adapt to new technologies.In relation to healthcare the report suggests that -
ACIP has proposed codifying the 'principles of inherent patentability (as developed by the High Court in the NRDC case and in subsequent Australian court decisions)'. In the view of the committee, this is an approach that is likely to add clarity to the Patents Act. In contrast, the amendments proposed in the Bill to alter the 'manner of manufacture' test in s 18 of the Patents Act are not likely to generate certainty within the patent system.
The proposed amendments contained in the Raising the Bar Bill also illustrate that other technology neutral changes to requirements in the Patents Act are viable. These amendments would tighten the requirements for the grant of patents in all fields of technology through proposals to raise the standards for inventive step, usefulness and disclosure of inventions. In the view of the committee, these proposals should contribute to improving the quality of inventions which are granted patents.
While previous inquiries and public discussions have focused on the patenting of human genes, the Bill goes further and proposes a specific exclusion for biological materials which are identical or substantially identical to such materials 'as they exist in nature'. The evidence received during the inquiry indicates that this exclusion is likely to have significant implications for a broad range of sectors and industries in Australia, including healthcare, pharmaceuticals, agriculture, food manufacturing and biotechnology. Extensive inquiries by the ALRC, the Senate Community Affairs Committee and ACIP have not revealed any persuasive evidence that would justify this type of broad exclusion from patentability for all biological materials.
The broad scope of the Bill, and the imprecise language of its provisions, was perceived by many as being potentially detrimental to Australia's patent system, the research sector and the many industries reliant on a stable patent system. The committee agrees that this ambiguity in the language of the Bill could discourage investment in research and development, and encourage litigation by those seeking to clarify patent rights.
The use of the term 'substantially identical' highlights many of these issues, particularly in view of the examples provided of current patented products, and those in development, which included inventive elements designed to mimic biological materials 'as they exist in nature'. The uncertain scope of the exclusion proposed for biological materials creates a risk that worthy inventions, which meet all the other requirements of patentability, will be unable to claim patent protection. Some amendments to the Bill were suggested during the inquiry to clarify the scope of the biological materials exclusion. However, in the view of the committee, these suggestions do not resolve the key deficiency of the Bill in seeking to carve out a broad category of subject matter from patentability.
The context for the debate over patents granted in relation to human genes and biological materials is the increasing scientific understanding of these materials and their increasing application to healthcare. As Dr Graeme Suthers from the Royal College of Pathologists noted, the relationship between genetic tests and clinical care 'is in a state of rapid flux at the moment'.In discussing research impediments the Committee commented that -
Like the Senate Community Affairs Committee, the committee received commentary which was concerning in relation to the potential impacts of the patents system on equitable access to healthcare. However, there was no evidence received by the committee that patents on human genes or biological materials are systematically leading to adverse impacts in the provision of healthcare in Australia. Further, as a number of submissions and witnesses highlighted, the enactment of the Bill would not resolve the issue which focused public attention on the patenting of human genes in Australia in the first place: the claims of Genetic Technologies over BRCA1 and BRCA2 genetic testing.
The evidence the committee received suggests that the key measure proposed by the Bill, the exclusion from patentability of biological materials which exist in nature, would also have significant adverse consequences for healthcare in Australia. This could potentially include:• long delays for Australian patients to access new diagnostic tests, medicines and treatments;
• reduced access for Australian patients to clinical trials; and
• a reduction in investment for medical research and development in Australia.
It is clear that legal uncertainty in relation to patents can cause anxiety for researchers and delays for research. In the BRCA example, legal claims by Genetic Technologies caused the research of the Peter MacCallum Cancer Centre to be delayed for a significant period. Currently, there is no provision in the Patents Act which clarifies the rights of researchers to freely conduct experiments. To ensure certainty exists for researchers, there was considerable support expressed during the inquiry for an explicit research exemption in the Patents Act. The amendments proposed in the Raising the Bar Bill clarify that research and experimental activities relating to patented inventions are exempt from infringement. In the view of the committee, a clear research exemption is the preferable approach to provide certainty for researchers. The Bill's proposed exclusion for biological materials would not provide this certainty for researchers.It also comments that
The evidence the committee received indicates that patents over human genes and biological materials have not hindered research, particularly medical research, in Australia. In contrast, there was clear evidence from submitters and witnesses that these patents have encouraged and contributed to research and development activities. Patents allow researchers to attract investment to pursue the development of new inventions and allow companies to mitigate the risks associated with developing costly new products, such as medicines.
The committee agrees that the significant amendments proposed in the Bill risk creating uncertainty regarding the stability of Australia's patent system. A broad range of research organisations and companies highlighted their concerns that the ambiguous nature of the Bill's provisions could negatively affect investment in research and development in Australia. Uncertainty regarding the capacity to secure patent protection for new inventions, caused by the enactment of the Bill, is likely to discourage investment in research and development and potentially drive investment funding and research activities overseas.
In the view of the committee there is a clear risk that, without certainty in relation patent protection for biological materials, companies will have less incentive to develop and commercialise new products for the Australian market. This could negatively impact these companies, and their employees and shareholders, but also Australian industries and consumers who would lose access to these new products. Additionally, there is a risk that without clear patent protection for inventions related to biological materials, there will be less incentive for researchers to publicly disclose recently developed knowledge and inventions in this area. Other researchers would then be unable to utilise and build on this new knowledge in their own endeavours.
In addition to social, economic and policy considerations, there are clearly ethical dimensions to the issue of patenting human genes and biological materials. Particularly in the case of patents over human gene sequences, many in the community feel uncomfortable that the patent system may allow applicants to claim a degree of ownership over material which already exists, in another form, in nature.
The recent ACIP report on patentable subject matter (ACIP Report) included significant discussion in relation to these ethical concerns. It noted that it was important that the social contract of the patent system should able to take into account both economic and ethical matters when regulating the subject matter eligible to be patented. The report proposed maintaining the current specific exclusions, including for 'human beings, and the biological processes for their generation' as well as amending the Patents Act to insert a general ethical exclusion. This general exclusion would exclude from patentability inventions 'the commercial exploitation of which would be wholly offensive to the ordinary reasonable and fully informed member of the Australian public'.
The ACIP Report recognised the benefit in having a flexible approach to this issue through creating an arrangement which considers Australian values as they exist at the relevant time. In the view of the committee, the ACIP proposal for a general ethical exclusion has merit and is a preferable approach to prevent the grant of patents which would be perceived as unethical by the community.
In the view of the committee, the enactment of the Bill could breach Australia's international obligations under the TRIPS Agreement and the AUSFTA to allow for the patenting of inventions in 'all fields of technology' without discrimination. While there is explicit scope in these international agreements for other relevant exceptions, such as to protect ordre public or morality and for human healthcare, the provisions of the Bill are not framed in these terms.
Examples of restrictions on the patenting of biological materials in some developing countries were raised during the inquiry. However, in the view of the committee, the factors driving these sorts of exclusions in developing countries do not necessarily translate to an advanced research jurisdiction such as Australia. The international legal position may, or may not, be in the process of evolution, but it is too early to be certain how these issues will be resolved. The committee's view is that, until a clear approach exists in comparable jurisdictions, significant advantages remain for Australia in maintaining the harmonisation of its intellectual property regime with international standards and those of its major trading partners.
The committee does not agree with the characterisation, made during the inquiry, that the Crown Use and compulsory licensing provisions in the Patents Act are not effective because they are rarely, if ever, utilised. The existence of legislative mechanisms can effectively influence patent-holder behaviour. For example, it can be argued that these provisions were an important contributing factor in the decision of Genetic Technologies to abandon its legal claims in relation to BRCA1 and BRCA2 genetic testing. However, the committee was also concerned to hear that there may be some complexity with the operation of the crown use provisions, depending on whether they were exercised in the right of the Commonwealth or in the right of the states. This subject may be an appropriate topic of future inquiry by ACIP.
During the inquiry, the Bill was described as 'well-intentioned' and the committee agrees with this characterisation. However, the committee does not agree that the Bill represents an effective solution to the problems which may be caused by patents over human genes and biological materials. In particular, the committee is concerned that proposed amendments in the Bill, which are focused on addressing a specific issue, could have a large number of unintended consequences across the entire patent system with indeterminate impacts on a range of industries and sectors.
Like many of those who gave evidence, the committee prefers the solutions offered in the proposed amendments of the Raising the Bar Bill. However, the committee does not consider that the amendments in the Raising the Bar Bill will resolve all of the issues in the patent system. In the opinion of the committee, serious consideration should also be given to the proposals for legislative enactment of the patentable subject matter test and the general 'ethical' exclusion made in the ACIP report on patentable subject matter. Other reforms may also be necessary in the future, particularly in relation to ensuring equitable access to healthcare. In this context, the committee recognises that the Senate Community Affairs References Committee has indicated it will maintain a 'watching brief' in relation to the impact of gene patents in Australia. Despite the need for further reform to the patent system, the committee agrees that removing an area of patentable subject matter, as proposed by the Bill, is not an appropriate solution to this complex set of issues.