21.4 Some jurisdictions have addressed concerns about the impact of patents on healthcare by excluding certain diagnostic, therapeutic or surgical methods of treatment from the scope of patentable subject matter—that is, by treating methods of medical treatment as an exclusion from patentability. This is the case in the United Kingdom and in Canada.
21.5 Australia has not adopted this approach. Provided an invention meets the requirements for patentability set out in the Patents Act 1990 (Cth) (Patents Act), the Patent Office will grant patents on diagnostic, therapeutic or surgical methods of treatment. As discussed in Chapter 7, the ALRC does not support the introduction of a new exclusion from patentability for methods of medical treatment. In particular, the ALRC is concerned that such an exclusion would have adverse effects on investment in biotechnology, medical research and innovation in healthcare.
21.6 However, to reject such an exclusion does not answer the question whether there should be a defence to a claim of infringement for methods of medical treatment. Where an exclusion from patentability exists, a patent cannot be granted and no question can arise about infringement of patent rights. In contrast, a defence does not affect the existence of patent rights but constrains the enforcement of these rights by providing protection against actions for infringement in specified circumstances. For this reason, a defence may involve a less dramatic diminution in the rights of inventors: while an exclusion from patentability means that the relevant subject matter is not patentable at all, a defence may be drafted to permit patents to be enforced in some circumstances but not in others. Yet, a broad a defence may also have adverse effects on investment and innovation.
21.7 Article 27(3)(a) of the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS Agreement) permits World Trade Organization (WTO) member states to exclude ‘diagnostic, therapeutic and surgical methods for the treatment of humans or animals’ from patentability. However, this exclusion may be limited to methods performed on or inside the body (in vivo procedures).
21.8 In practice, gene patents most often relate to products and processes for use outside the human body, notably in connection with genetic sequencing and diagnostic genetic testing. These are commonly described as in vitro procedures, meaning literally that they are performed within a glass (a test tube). Even in the case of gene therapy, patents are most likely to relate to processes carried out in vitro—such as inserting genes into a gene carrier (or ‘vector’) and using the vector to carry the genes into somatic cells. However, some procedures for introducing vectors, modified cells or stem cells into the human body (for example, by injection) are performed on the human body and may be ‘methods of medical treatment’ as understood by patent law.
21.9 The ALRC has concluded that if reform in relation to gene patents and medical treatment were justified, the introduction of a new defence—as opposed to an exclusion from patentability—would be the preferable approach because such a defence could apply to both in vivo and in vitro procedures, and could be more targeted in its application to patented inventions. However, as discussed below, there are many difficulties in introducing such a defence and the ALRC has concluded that such a change is not warranted.
 See Patents Act 1977 (UK) s 4(2). The exclusion in Canada is based on case law interpreting patentability criteria.
Agreement on Trade-Related Aspects of Intellectual Property Rights (Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization),  ATS 8, (entered into force on 1 January 1995).