16.24 The Organisation for Economic Co-operation and Development has noted:
Patents are especially important for biotechnology firms as many of them have no activity other than R&D and therefore do not directly exploit their inventions: they sell them, or the right to exploit them, to other firms. A legal property right is therefore needed for the seller to be protected.
16.25 Regulatory requirements can mean the process of developing technology into a marketable product is long and costly. As one biotechnology sector analyst has commented, companies need ‘tons of time and buckets of money’ to bring products to market. Intellectual property rights afford producers protection during this period, and the monopoly gained by a patent allows for the high initial investment in development to be recouped.
16.26 The majority of all biotechnology patents originate in the United States. United States companies account for 65.5% of all biotechnology patents issued by the United States Patent and Trademark Office and almost 50% of those issued by the European Patent Office.
16.27 It is difficult to obtain reliable figures on the number of gene patents granted, or the number of applications pending, in Australia or overseas. A threshold complexity concerns the definition of a gene patent. As outlined in Chapter 3, this Report uses ‘gene patent’ to refer to patents on genetic materials or technologies, and not just to patents on isolated genetic materials. Others may use the term more narrowly to refer only to patents that assert claims on isolated genetic materials and the genetic sequences they contain. Complexities also arise because of the way in which patents and applications are classified under the International Patent Classification (IPC) system, and because of the limited amount of published patent information.
16.28 Biotechnology Australia is currently undertaking a detailed analysis of gene patenting activity in Australia over the last decade, with a view to compiling reliable statistics on the number of gene patents granted in the various IPC classes.
16.29 It appears clear, however, that most gene patents granted in Australia relate to inventions that are developed overseas. One research study, conducted for the United States National Science Foundation, examined the source of patent applications in relation to ‘international patent families’ covering human DNA sequences. The study assumed that the priority application (the first application filed anywhere in the world) was the country in which the invention was developed. The study found that, from 1995–1999, 736 applications related to inventions developed in the United States, compared with 150 in Japan, 107 in the United Kingdom, 42 in Australia and 28 in Canada (see Figure 16–1).
16.30 Of the 42 applications filed by Australian organisations, 16 were filed by corporations, 16 by universities, six by other not-for-profit entities, three by government agencies and one by an individual (see Figure 16–2).
Figure 16–1 Country of origin of patent applications on human DNA sequences filed in Australia 1995–1999
16.31 Studies relating to Australian biotechnology patents also indicate that most of these are foreign owned. Nielsen reports that only about 2% of biotechnology applications filed in Australia originate from Australian inventors. She notes that ‘by far the greatest number of biotechnology patents are held by US inventors, both in the US and in other jurisdictions including Australia’.
Figure 16–2 Australian organisations filing Australian patent applications on human DNA sequences by sector, 1995–1999
16.32 Nielsen also notes that of the biotechnology patent applications in the United States, around 2% originate from Australia. A report by CHI Research Inc found that, of Australian patents granted in the United States, Australia was ‘relatively strong in pharmaceuticals and biotechnology and quite weak in most other high-tech areas’. The report suggested that ‘combined pharmaceuticals and biotech [Australian-invented US patents] … may in fact represent an area of actual or potential great strength for Australia’.
16.33 The number of patents granted does not tell the whole story in relation to the biotechnology sector. Licensing arrangements to make technology available to others are also an important feature of the biotechnology industry. These arrangements are discussed in Chapter 22.
 Organisation for Economic Co-operation and Development, An Overview of Biotechnology Statistics in Selected Countries (2003), 13.
 D Crowe, ‘Testing Time for Biotech’, Financial Review (Sydney), 7 October 2003, 61.
 Organisation for Economic Co-operation and Development, Biotechnology Statistics in OECD Member Countries: Compendium of Existing National Statistics (2001), 12.
 See Ch 8 for more detail.
 L Rausch, ‘International Patenting of Human DNA Sequences: InfoBrief (NSF 02–333)’, Division of Science Resource Statistics, National Science Foundation, September 2002, 1.
 A ‘patent family’ was defined as consisting of all patent documents published in a country and associated with a single invention. An ‘international patent family’ was defined as an invention for which patent protection has been sought in more than one country: see Ibid, 1–2.
 Ibid, Table 2.
 J Nielsen, ‘Biotechnology Patent Licensing Agreements and Anti-competitive Conduct’ in Centre for Law and Genetics (ed) Regulating the New Frontiers: Legal Issues in Biotechnology Symposium (Occasional Paper No 4) (2002), 38, 39.
 Ibid, 39.
 Ibid, 39.
 CHI Research Inc, Inventing Our Future: The Link between Australian Patenting and Basic Science (2000), 29.