12.8 The major debate in this area revolves around whether gene patents have a chilling effect on research and innovation, rather than promoting them. Two reasons are generally advanced for this possible effect. The first is that research may be hindered by researchers’ concerns about infringing patents or about the difficulties of obtaining licences to use patented inventions on appropriate terms. The second reason, discussed in Chapters 11 and 14, is that government policies relating to the commercialisation of research, together with certain aspects of patent law and practice, mean that information about research outcomes may not come into the public domain to be used freely by other researchers.
12.9 Whether the proliferation of upstream intellectual property claims in rapidly advancing fields of technology such as genetics promotes or retards research and innovation has been described as ‘an empirical question of considerable complexity’. The Organisation for Economic Co-operation and Development (OECD) has referred to the ‘conspicuous absence of rigorous economic studies’ that explore the impact of gene patents on research.
12.10 There have been some limited empirical studies about the impact of gene patents and licences on research. In general, their conclusions have been equivocal. For example, a study in the United States by John Walsh, Ashish Arora and Wesley Cohen (Walsh study) noted that, while the patenting of upstream discoveries had increased, almost no-one reported that worthwhile projects had stopped because of restrictions on access to intellectual property rights for research tools. Instead, the Walsh study found that most researchers, both in universities and industry, had adopted ‘working solutions’.
12.11 In 2002, the OECD Working Party on Biotechnology Report (OECD Report) identified a number of issues concerning the possible adverse impact of gene patents on research, including blocking patents or overly broad patents; increases in secrecy and a slower pace of research; increased research and transaction costs; and increased litigation involving public research organisations. Despite documenting some specific concerns held by researchers, the OECD Report did not substantiate fears that growth in the number and complexity of biotechnology patents is preventing access to inventions for research purposes.
12.12 In Australia, Dr Dianne Nicol and Jane Nielsen conducted an empirical study in 2003 of medical biotechnology patenting (Nicol–Nielsen Study). They analysed 49 written survey responses from respondents from private sector biotechnology and pharmaceutical companies, 23 from research institutions and 18 from diagnostic testing facilities, together with the results of 40 targeted interviews.
12.13 While it is hard to draw firm conclusions from these studies, their specific findings are important in understanding how researchers and others perceive the impact of gene patents on research. These are discussed throughout this chapter.
Submissions and other views
12.14 The ALRC received a wide range of comments in submissions concerning the impact of gene patents and licensing on the conduct of research. Many submissions maintained that there is no current evidence that gene patents are inhibiting research in Australia. One reason for this is that ‘researchers are often oblivious to the patent rights held by commercial entities’. It was said that the absence of infringement proceedings and other enforcement activities means it is unlikely gene patents are stifling innovation, at least in Australian universities. However, submissions cautioned that while gene patents do not appear to have had an adverse effect on research to date, the situation could change in the future, and that increased levels of patent enforcement should be anticipated.
12.15 Submissions highlighted possible adverse impacts on research. The National Health and Medical Research Council (NHMRC) noted that the complexities of the patent system may have a ‘dampening’ impact on research, particularly where organisations lack expertise in intellectual property management. The Australian Health Ministers’ Advisory Council referred to difficulties arising in ‘negotiating commercially viable licences with patent holders in order to explore the development of alternative technologies in relation to an already patented gene’. The Royal College of Pathologists of Australasia noted evidence that excessively broad patents have inhibited research in biotechnology.
12.16 The Nicol–Nielsen Study provides other views on patents and research in biotechnology. Respondents from research institutions had predominantly positive views about the impact of patents on research and development. Respondents from biotechnology companies also viewed the impact of patents on their research positively. However, Nicol and Nielsen found that all sectors of the biotechnology industry had greater concern about the potential for gene patents to have a negative impact on research than for any other type of patents.
12.17 Consistently with submissions to this Inquiry, warnings were sounded about the future. Nicol and Nielsen noted that, as Australian companies and institutes gain an international presence, they may attract more attention from patent holders. While vigorous patent enforcement has not been typical, it was said that both overseas and Australian companies are starting to take a more aggressive approach to enforcement.
12.18 Nicol and Nielsen concluded that there has been some evidence in Australia of exclusionary practices in relation to biotechnology patents. This is not surprising, as the right to exclude others from exploiting an invention is a fundamental attribute of patent protection. Nicol and Nielsen found few researchers who were concerned about the long-term effects on research of restricted access to patented inventions and that ‘in most cases research was able to proceed albeit in a modified fashion’.
12.19 Many submissions focused on the benefits of patent protection for research, citing opportunities to obtain research funding from commercial sources and to recycle the financial benefits of commercialised research back into the research effort.
In many cases, the existence of gene and other biotechnology patents has attracted crucial financial support from the biotechnology and pharmaceutical industries (as well as private investors) and has allowed the continuation of medical research.
 R Eisenberg, ‘Bargaining over the Transfer of Proprietary Research Tools: Is the Market Failing or Emerging?’ in R Dreyfuss, D Zimmerman and H First (eds), Expanding the Boundaries of Intellectual Property: Innovation Policy for the Knowledge Society (2001), 223, 223.
 Organisation for Economic Co-operation and Development, Genetic Inventions, Intellectual Property Rights and Licensing Practices: Evidence and Policies (2002), 82.
 J Walsh, A Arora and W Cohen, ‘Effects of Research Tool Patenting and Licensing on Biomedical Innovation’ in W Cohen and S Merrill (eds), Patents in the Knowledge-Based Economy (2003), 285, 331.
 For example, licensing, inventing around, going offshore, court challenges and invoking a research exemption: Ibid, 331.
 Organisation for Economic Co-operation and Development, Genetic Inventions, Intellectual Property Rights and Licensing Practices: Evidence and Policies (2002), 12–15.
 For example, about the impact of reach-through licensing agreements: Ibid, 79.
 D Nicol and J Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (2003) Centre for Law and Genetics Occasional Paper No 6.
 Ibid, 64–71.
 Royal College of Pathologists of Australasia, Submission P26, 1 October 2003; G Suthers, Submission P30, 2 October 2003; GlaxoSmithKline, Submission P33, 10 October 2003; Department of Industry Tourism and Resources, Submission P36, 13 October 2003; Walter and Eliza Hall Institute of Medical Research, Submission P39, 17 October 2003; Genetic Technologies Limited, Submission P45, 20 October 2003; A McBratney and others, Submission P47, 22 October 2003; Davies Collison Cave, Submission P48, 24 October 2003; Queensland Government, Submission P57, 5 January 2004; AusBiotech Ltd, Submission P58, 7 November 2003.
 A McBratney and others, Submission P47, 22 October 2003.
 Ibid. See also Ch 13.
 South Australian Government, Submission P51, 30 October 2003; G Suthers, Submission P30, 2 October 2003; Royal College of Pathologists of Australasia, Submission P26, 1 October 2003.
Australian Centre for Intellectual Property in Agriculture, Submission P12, 29 September 2003; Royal College of Pathologists of Australasia, Submission P26, 1 October 2003; Caroline Chisholm Centre for Health Ethics Inc, Submission P38, 17 October 2003; Australian Health Ministers’ Advisory Council, Submission P49, 23 October 2003; Department of Health Western Australia, Submission P53, 3 November 2003.
 National Health and Medical Research Council, Submission P52, 31 October 2003.
 Australian Health Ministers’ Advisory Council, Submission P49, 23 October 2003.
 Royal College of Pathologists of Australasia, Submission P26, 1 October 2003.
 D Nicol and J Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (2003) Centre for Law and Genetics Occasional Paper No 6, 85.
 Ibid, 84–85.
 Ibid, 90.
 Ibid, 140.
 Ibid, 172.
 See, eg, AusBiotech Ltd, Submission P58, 7 November 2003; A McBratney and others, Submission P47, 22 October 2003.
 A McBratney and others, Submission P47, 22 October 2003.