High Court confirms that nucleic acid sequences are not patentable in Australia: D’Arcy v Myriad Genetics Inc

The High Court of Australia has handed down a significant decision, holding that Myriad’s patent claims for isolated nucleic acid sequences, indicative of a predisposition to breast cancer, are not patentable subject matter in Australia: D’Arcy v Myriad Genetics Inc & Anor [2015] HCA 35.  The decision does not touch on the remaining 27 claims of the Myriad patent. 
 
The decision overturns a unanimous decision of the Full Federal Court and the decision of Justice Nicholas at first instance, both of which found that the nucleic acid sequences in question were patentable subject matter.
 
In Australia, the decision has effectively transformed the test for patentable subject matter which was described by the High Court in the landmark decision of NRDC v Commissioner of Patents (1959) 102 CLR 252 (NRDC).  In NRDC the Court enquired whether the invention was directed to an artificial state of affairs with commercial utility.  That statement of principle has now been significantly altered. 
 
As patent practice responds in Australia, there are likely to be wide ranging consequences for patentees of biologically derived products.  Indeed, future challenges to a range of inventions are now likely to include the ground that the claims of the patents may not constitute patentable subject matter.
 
The High Court’s decision
 
While the High Court’s decision was unanimous, three separate judgments were delivered. 
The majority judgment of French CJ, Kiefel, Bell and Keane JJ acknowledged the Full Federal Court’s refusal to determine the question by reference to policy or social arguments, but nonetheless considered that the approach taken in the Full Federal Court in their application of the NRDC test was ‘unduly narrow’.
 
The majority maintained that the Court should have regard to ‘purposive and consequentialist considerations’ and identified four relevant factors:

1. whether patentability is consistent with the purposes of the Patents Act (including the negative effects on innovation, any chilling effect and the need for the Court to assess public and private interests);
2. the effect of a finding on the coherence of the law;
3. Australia’s place in the international community of nations; and
4. whether to accord patentability would best be left to the legislature.

 
The majority proceeded to find that the claimed gene sequences were not sufficiently the product of human action to constitute patentable subject matter.  Applying the additional factors outlined above, the majority identified that a finding of patentability for Myriad’s claims:

• would result in a chilling effect on legitimate innovation;
• was not required to achieve coherence in the law; and
• was not required to achieve conformity with treaty obligations or consistency with the laws of other trading partners.

 
Implications of the High Court’s decision
 
The decision casts some doubt on the patentability of naturally occurring things, posing challenges for industries reliant on patent protection for biological compounds and genes, although the work of the Human Genome Project has largely rendered similar gene patents obsolete.
 
Many fields of invention are likely affected, not just those in which patents are directed to genetic sequences, as courts and the Australian Patent Office will now be required to adopt a fundamentally different approach when considering new fields of innovation.  For example, the extent to which business method and computer implemented inventions are directed to patentable subject matter has been the source of uncertainty resulting in disputes before the Federal Court, and the decision of the High Court in Myriad paves the way for further challenges. 
 
There is also a legitimate concern that the decision may also encourage revocation actions against patents on the ground that similar biological inventions are not patentable subject matter. 
 
Proposed changes to Australian Patent Office Practice
 
An immediate consequence for Australian patent practice is how the Commissioner of Patents will assess patent claims relating to isolated naturally occurring products. 
 
The Commissioner, through IP Australia, has recently released draft proposed changes in its practice for examining applications.  A call for submissions from stakeholders has, at the time of writing, closed (having being extended once already).  Based on what has been said, it appears the Commissioner will no longer grant patents on some genetic sequences, but proposes to continue to allow claims for a number of other types of naturally occurring DNA and other human, bacterial and viral genetic elements.
 
Following the High Court’s ruling that ‘a claim to an isolated nucleic acid that merely represents information coding for a polypeptide is not patent eligible’, the Commissioner has concluded that the following subject-matter are not eligible:

• naturally occurring human and non-human nucleic acid sequences encoding polypeptides or functional fragments thereof - either isolated or synthesised;
• cDNA; and
• naturally occurring human and non-human coding RNA - either isolated or synthesised. 

 
Many in the industry will be disappointed to learn that the proposed practice regards all cDNA (that is, the synthesised complementary DNA containing the same genetic information as in the naturally-occurring DNA from which it is originally sourced) as not being patentable subject matter. 
 
In what has been described (by some) as a ‘narrow’ view of the decision, the Commissioner continues to regard certain types of isolated natural products as patentable, such as naturally occurring isolated regulatory DNA (e.g., promoters), isolated non-coding DNA and RNA, naturally occurring isolated bacteria and viruses, isolated polypeptides, antibodies and chemical molecules isolated from natural sources.  It also appears, in contrast to nucleic acid sequences and other biologically-derived products, that patents for diagnostic tests and tools remain patentable. 
 
Nonetheless, various stakeholders have begun to lobby for a more restrictive examination practice by the Commissioner.  At the time of writing, the Australian press has reported that the Cancer Council Australia and Clinical Oncology Society of Australia have together made submissions against the guidelines as being inconsistent with the High Court’s decision.  We understand that the Commissioner may significantly revise the guidelines following the round of public consultation

Of course, any view taken by the Commissioner is likely to be the subject to review by the Federal Court and it remains to be seen whether the Court will adopt a similar approach to interpreting the Myriad decision.
 
Where to next?
 
While the decision is final for Myriad, it may now be the case that the fight to define the new boundaries of patentable subject matter in Australia has only just begun.  Both the majority judgment and that of Gordon J expressly allude to the need for legislative intervention.  In view of the potentially wide ranging consequences of the decision, such an intervention may eventually prove to be necessary.
 
In the short term, interested parties should keep a look out for the Commissioner of Patents’ final examination practice guidelines.  While the timeline for the finalised guidelines is not clear, they will likely take the form of an amendment to the Australian Patent Office’s Manual of Practice and Procedure.  Timing for the guidelines may largely depend on the number (and content) of submissions the Commissioner has received.  IP Australia will release the public submissions following their review. 
 
As the Australian Patent Office has deferred all pending applications directed to technologies that could be affected by the High Court’s decision until the guidelines are finalised, it is hoped that there will be relatively fast turn-around, and that the final form will be available soon after this article is published. 

James Ellsmore occupies a corner in Mallesons’ Sydney office where he’s allowed to blog on all things patent, pharma and biotech related. He also dabbles in other aspects of IP when given the chance. When he’s not blogging, James works on contentious patent and IP disputes, telling himself that science is cool and wondering what his imaginary friends – the non-inventive skilled addressees – would do. 

James can be contacted on +61 2 9296 2000 

Kim O'Connell is a partner in the Sydney office of King & Wood Mallesons where she specialises in intellectual property law, with a focus on patents and regulation of pharmaceuticals, biotech and health related products.

Kim acts for a wide range of clients in commercialising intellectual property and in resolving commercial disputes arising out of IP ventures, and advises on day to day activities, including commercial transactions, joint ventures, marketing and distribution arrangements, research and development arrangements, labelling and advertising.

Kim can be contacted on +61 2 9296 2188 or by email at kim.oconnell@au.kwm.com