Patentable subject matter

The ‘manner of manufacture’ test

6.20 Currently, genetic materials and technologies are treated as inventions for which patent protection is available, provided the legislative requirements are satisfied.^[20] ‘Invention’ is defined in the Patents Act as ‘any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention’.^[21]

6.21 The Statute of Monopolies was enacted in England in 1623, but is not reproduced in the Patents Act. Section 6 of the Statute provides as follows:

Provided also and be it declared and enacted that any declaration before mentioned shall not extend to any letters patent and grants of privilege, for the term of 14 years or under hereafter to be made of the sole working or making of any manner of new manufacture within this realm to the true and first inventor and inventors of such manufactures which others, at the time of making such letters or grant, shall not use, so as also they be not contrary to the law, nor mischievous to the state, by raising prices of commodities at home or hurt of trade or generally inconvenient.^[22]

6.22 The concept of invention has not, to date, been limited to the literal meaning of the term ‘manner of new manufacture’ in the Statute of Monopolies.^[23] In the leading Australian decision, National Research Development Corporation v Commissioner of Patents (NRDC),^[24] the High Court indicated that a policy-oriented approach should be adopted to the meaning of the term:

The word ‘manufacture’ finds a place in the present Act, not as a word intended to reduce the question of patentability to a question of verbal interpretation, but simply as the general title found in the Statute of Monopolies for the whole category under which all grants of patents which may be made in accordance with the developed principles of patent law are to be subsumed …

The right question is: ‘Is this a proper subject of the letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?’^[25]

6.23 For an invention to be a ‘manner of manufacture’, as interpreted in NRDC, it must belong to the ‘useful arts’ rather than the ‘fine arts’; it must provide a material advantage; and its value to the country must be in the field of economic endeavour.^[26] However, judicial interpretation has also recognised a number of categories of subject matter that will fail to satisfy the test. These include mere discoveries, ideas, scientific theories and laws of nature.^[27]

6.24 The categories of inventions that may satisfy the manner of manufacture test have gradually expanded over time. The report of the Intellectual Property Competition Review Committee (the IPCRC) in 2000 outlined the expansion of the categories of patentable subject matter from a method for extracting lead from humans, to agricultural processes, new plant varieties, micro-organisms, methods of cosmetic and therapeutic treatment of humans, and mathematical applications (in computer programs).^[28] This expansion mirrors developments in other jurisdictions.^[29]

6.25 The manner of manufacture test is expressed in terms that appear obscure in a modern context.^[30] However, reviews of Australian patent law have recommended that the requirement be preserved as the threshold test for patentability. A 1984 report of the Industrial Property Advisory Committee (IPAC Report) considered that the concept ‘operates quite satisfactorily’ and ‘has, in the past, exhibited a capacity to respond to new developments’.^[31] The IPAC Report recommended that ‘the present threshold test for patentability by reference to s 6 of the Statute of Monopolies and to the expression “manner of new manufacture” be retained, without specific legislative inclusions or exclusions’.^[32] Similarly, the IPCRC considered that the ‘open-textured standard’ represented by the manner of manufacture test should be retained. It concluded that: ‘Australia has on the whole benefited from the adaptiveness and flexibility that has characterised the “manner of manufacture” test’.^[33]

6.26 In reaching the conclusion that the manner of manufacture test should be retained, both the IPAC Report and the IPCRC considered that codification of a concept of invention in the Patents Act would be likely to result in greater uncertainty (with the attendant costs) than the current test.^[34]

Patentable subject matter in other jurisdictions

6.27 Other jurisdictions frame the test for patentable subject matter differently.^[35] United States patent law provides that to be patentable subject matter ‘the claimed invention must be a process, machine, manufacture, or composition of matter that has a practical utility’.^[36] Patent legislation in the United Kingdom defines patentable subject matter by exclusion: an invention is patentable if it satisfies the other requirements for patentability and is not, among other things, a ‘discovery, scientific theory or mathematical method’ or ‘a scheme, rule or method for performing a mental act’.^[37]

6.28 Associate Professor Ann Monotti and Professor Sam Ricketson have commented that the choice of (seemingly outdated) statutory language relating to the test for patentable subject matter in patent statutes in Australia, the United States and the United Kingdom ‘seems to reflect a general understanding, by both courts and legislatures, that it is impossible to find a form of language that will adequately cover, at any one time, the multifarious and diverse forms in which human inventiveness may manifest itself’.^[38]

6.29 Monotti and Ricketson also suggested that the issue of what is an invention for the purposes of patent law may only become contentious at the margins, as new developments in science and technology occur. Historically, courts have been able to address patentable subject matter by a process of progressive interpretation.^[39] Even where legislatures have expressly stated exceptions to patentable subject matter, these provisions have generally been limited in their effect.^[40]

Application to genetic materials and technologies

6.30 There has been limited consideration in Australia of the application of the manner of manufacture test to genetic materials and technologies.^[41] The requirement does not appear to have limited the types of inventions involving genetic materials and technologies that will be patentable.^[42] Dr Dianne Nicol has suggested that inventions involving genetic materials and technologies appear to satisfy the NRDC requirements because genetic research and treatments are commercial in nature and have value in an economic sense, both directly through the activities of the Australian biotechnology industry and indirectly through the ability of such technology to alleviate disease.^[43]

Discoveries

6.31 It has been suggested that genetic materials are ‘discoveries’ and do not, therefore, constitute patentable subject matter. Traditionally, discoveries have been regarded as outside the scope of patentable subject matter because no knowledge or ingenuity has been applied to produce a new and useful thing.^[44] However, distinguishing between discoveries and inventions for the purposes of patent law is difficult. The High Court in NRDC suggested that drawing such a distinction might be misleading and be true often only in a formal sense.^[45] IP Australia’s Patent Manual of Practice and Procedure (Manual) also notes that ‘no general definition can be given as to what constitutes a discovery as opposed to an invention’.^[46]

6.32 Consideration of the distinction between a discovery and an invention in the context of biotechnology patents first arose in relation to patent claims over micro-organisms. In Australia and elsewhere, ‘man-made’ micro-organisms have been accepted as constituting patentable subject matter;^[47] ‘isolated and purified’ cultures of micro-organisms may also be patentable. However, micro-organisms in their naturally occurring state are regarded as discoveries and, as a consequence, patent protection will not be available. More recently, the difference between a discovery and an invention has arisen in relation to patent applications claiming genetic sequences. The decisions that have addressed this issue in Australia and overseas have drawn a distinction between genetic materials in their natural state and those that have been isolated and purified.

Australia

6.33 Kiren-Amgen Inc v Board of Regents of the University of Washington involved an opposition to a patent application for the purified or isolated DNA sequence encoding the human protein erythropoietin, which plays a major role in the formation of red blood cells.^[48] The Deputy Commissioner of Patents stated: ‘In my view, a claim directed to naturally occurring DNA characterised by specifying the DNA coding for a portion of that molecule would likely be claiming no more than a discovery per se and not be a manner of manufacture’.^[49] He found, however, that the principle did not apply to the patent application at issue because the claims were directed to purified and isolated DNA sequences that were ‘an artificially created state of affairs’.^[50]

6.34 Applying this principle more generally, IP Australia has indicated that the following subject matter will not be deemed to be a discovery under Australian law:

The building blocks of living matter, such as DNA and genes (including human DNA and genes) which have for the first time been identified and copied from their natural source and then manufactured synthetically as unique materials with a definite industrial use.^[51]

6.35 In addition, IP Australia’s Manual provides specific guidance on the difference between a discovery and an invention in the context of gene patents:

The discovery of a micro-organism, protein, enantiomer or antibiotic in nature can be claimed in its isolated form or as substantially free of (perhaps, specified) impurities. Also, a gene can be claimed as the gene per se (as long as the claim does not include within its scope the native chromosome of which the gene forms part) or as the recombinant or isolated or purified gene.^[52]

Other jurisdictions

6.36 In 1988, the European Patent Office (EPO), the United States Patent and Trademark Office (USPTO), and the Japanese Patent Office (JPO) issued a joint statement explaining the distinction between natural and man-made substances for the purposes of patent law in those jurisdictions:

Purified natural products are not regarded as products of nature or discoveries because they do not in fact exist in nature in an isolated form. Rather, they are regarded for patent purposes as biologically active substances or chemical compounds and eligible for patenting on the same basis as other chemical compounds.^[53]

6.37 Article 52(2) of the European Patent Convention (EPC) provides that, among other subject matter, ‘discoveries’ shall not be regarded as inventions for the purposes of the European patent law.^[54] The EPO considered the application of this provision in the case of Howard Florey/Relaxin.^[55] The case involved an opposition to a patent for a DNA fragment coding for a human H2-preprorelaxin—a synthetic genetic sequence that had the same operative function as natural H2-relaxin, but lacked certain introns found in the naturally occurring sequence. The Opposition Division of the EPO held that:

a substance freely occurring in nature is a mere discovery and therefore unpatentable. However, if a substance found in nature has first to be isolated from its surroundings and a process for obtaining it is developed, that process is patentable. Moreover, if this substance can properly be characterised by its structure and it is new in the absolute sense of having no previously recognised existence, then the substance per se may be patentable.^[56]

6.38 Following the implementation of the Directive on the Legal Protection of Biotechnology Inventions (EU Biotechnology Directive) in 1998, the patentability of isolated genetic sequences is now expressly recognised under European law.^[57] Article 5 of the EU Biotechnology Directive provides that, while the human body and ‘the simple discovery of one of its elements, including a sequence or partial sequence of a gene’ is not patentable:

An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.^[58]

6.39 In the United States, biological material was first recognised as patentable subject matter by the United States Supreme Court in Diamond v Chakrabarty.^[59] The issue before the Supreme Court was whether a genetically engineered bacterium capable of breaking down crude oil constituted patentable subject matter. Upholding the patent at issue, the Supreme Court stated:

The patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature’s handiwork, but his own; accordingly it is patentable subject matter.^[60]

6.40 The Supreme Court indicated that the concept of patentable subject matter under United States law included ‘anything under the sun that is made by man’.^[61] Dr Dianne Nicol and Jane Nielsen have commented that this decision ‘laid the foundation for a growing body of case law and patent office decisions’ in the United States supporting the patentability of a range of biological material, including whole organisms, genes, proteins, and cell lines.^[62]

Criticisms of the discovery/invention distinction

6.41 Various criticisms have been made of the distinction between naturally occurring genetic materials and those that have been purified and isolated.

• Isolated and purified genetic materials are structurally similar or identical to the form that exists in nature.

• Even if genetic materials are isolated and purified, the characteristics of such materials—which are the ‘useful’ properties or information—are naturally occurring, not created by the person who isolates and purifies the material.

• Isolation and purification of genetic materials may not, in fact, occur because genetic materials (particularly genetic sequences) may be identified by computational techniques.^[63]

Submissions and consultations

The manner of manufacture test

6.42 DP 68 proposed that the responsible Minister should request the Advisory Council on Intellectual Property (ACIP) to review the appropriateness and adequacy of the manner of manufacture test as the threshold requirement for patentable subject matter under Australian law.^[64]

6.43 A number of submissions supported this proposal.^[65] Submissions commented that the manner of manufacture test provides only vague criteria,^[66] and that its appropriateness and adequacy is questionable.^[67] Some submissions suggested that the manner of manufacture test does not seem to have placed any limits on the patentability of inventions involving genetic materials to date.^[68] Others considered that the manner of manufacture test should be reviewed to clarify the significance of the usefulness of an invention in determining whether a patent should be granted.^[69] These latter submissions are considered later in this chapter.

6.44 Submissions commented on the nature of the proposed review and the most appropriate body to undertake it. Some submissions indicated that any such review should involve extensive consultation with stakeholders.^[70] Submissions also considered that ‘the focus of the review and outcomes to be achieved’ should be clearly defined.^[71] The Department of Health and Ageing expressed concern that issues associated with genetic materials might be given insufficient attention in a general review of the manner of manufacture test.^[72] The Department encouraged the ALRC to ‘address interim solutions’ to these issues—in particular, the invention/discovery distinction and the circumstances in which an invention could be excluded from patentability on the grounds that it is ‘generally inconvenient’.^[73]

6.45 IP Australia indicated that the manner of manufacture test might be unclear to those who do not interact with the intellectual property system on a regular basis. However, it questioned whether a review of the test is warranted and observed that it would be a significant task.^[74] Other submissions expressed similar objections to a review of the manner of manufacture test. They considered that the test has proven to be ‘flexible and able to take account of developing technologies and developing inventive concepts’.^[75] Submissions also commented that a substantial body of case law exists on the scope of the manner of manufacture test^[76] and that there is the potential for a new test to create a new raft of problems.^[77] A few submissions suggested that such problems would be particularly significant if Australia were to adopt the European system of defining patentable subject matter through exceptions.^[78]

Discoveries

6.46 Many submissions asserted that genetic materials, and in particular genetic sequences, are discoveries and should not be patentable.^[79] These concerns were expressed primarily by participants in the research and healthcare sectors. Some submissions considered that genetic materials should not be patentable subject matter because an ‘improved’ version of naturally occurring genetic material cannot be developed (except, perhaps, by natural selection).^[80] For example, Dr Graeme Suthers submitted:

If a patent is granted on a process … a better process can conceivably be patented in the future. A patented process may be the only means of achieving some task today, but it need not be the exclusive means in the future. Conversely, a patent on a naturally occurring item or concept represents a very different sort of right. A naturally occurring entity cannot be improved, and there is no prospect of another person patenting a better version in the future.^[81]

6.47 Other submissions were critical of the basis upon which the patentability of genetic materials and technologies is justified—namely, that isolated and purified genetic material is an invention, not a discovery.^[82] Luigi Palombi suggested that this concept is a ‘legal and scientific fiction’: regardless of the process of isolation and purification, the fundamental characteristics of isolated genetic material remain the same as those found in nature.^[83] Palombi suggested that the comparison between inventions involving genetic materials and those involving chemical compounds is ‘not helpful and is misleading’ in determining whether genetic materials should constitute patentable subject matter and that the useful and commercially valuable characteristic of a genetic sequence is information—namely, instructions that code for a protein.^[84]

6.48 Similarly, Sonya Brown submitted that, ‘due to the information storage role of DNA, purified gene sequences are unique chemical compounds’, and the patent system was not designed to deal with materials that are hybrid compositions of chemicals and information.^[85] Suthers agreed that patent offices need to recognise the dual nature of genes. He considered that a distinction should be drawn between a ‘gene-as-a-chemical’ (which may be patentable) and a ‘gene-as-information’ (which should not be).^[86]

6.49 However, submissions from a range of organisations regarded the patentability of isolated and purified forms of naturally occurring material—including genetic material—as a well-established principle.^[87] Others thought that the practice of patenting isolated genetic materials could not be revisited at this point, even if it was flawed in principle.^[88] Davies Collison Cave, a firm of patent attorneys, commented that claims that genetic materials are non-patentable discoveries may be based on a misunderstanding of the nature of patents:

It is a common … misconception that a claim to such an ‘isolated’ material product somehow seeks to claim the material or product that exists in nature; such misconceptions reflect a general misunderstanding of the nature of patents and particularly of the role of the claims of a granted patent in defining the rights of the patent holder under the patent.^[89]

6.50 Some submissions suggested that the argument that inventions involving genetic materials are discoveries does not adequately take into account the requirements for patentability.^[90] For example, the procedures required to isolate and purify particular genetic materials are relevant to an assessment of whether or not there has been an inventive step. Further, mere isolation and purification of genetic material may not satisfy the manner of manufacture test or the disclosure requirements, unless some corresponding commercial application has been identified for the material. These requirements are considered further below.

ALRC’s views

6.51 It is clear that the processes for identifying, isolating and purifying naturally occurring materials, including biological material such as genetic sequences, should be patentable when those processes satisfy the other requirements of patentability—namely, when they are novel, inventive, useful and fully disclosed. However, legitimate concerns have been raised about the patenting of biological materials that occur in nature, but have been isolated and purified by humans. Isolated biological materials may, in some cases, replicate exactly the composition and characteristics of material that occurs in nature. Although one cannot deny the legitimacy of patenting processes for isolating and purifying naturally occurring materials, or the legitimacy of patenting new chemical substances that are the product of human ingenuity, there are attractive arguments for the view that such materials should not have been treated as patentable subject matter.

6.52 However, the time for taking this approach to the patenting of products and materials has long since passed. For decades, naturally occurring chemicals have been regarded by patent offices in many jurisdictions as patentable subject matter, when they are isolated and purified. This principle has been applied by analogy to biological materials, including genetic sequences, on the basis that they are ‘merely’ complex organic compounds. This development was certainly not foreseen when the modern patent system was established, and a different approach might have been available when the issue first arose for consideration.

6.53 Nonetheless, the ALRC considers that a new approach to the patentability of genetic materials is not warranted at this stage in the development of the patent system, for the following reasons:

• It would represent a significant and undesirable departure from accepted international practice with respect to genetic inventions, and may adversely affect investment in the Australian biotechnology industry.

• It may fail to deliver the anticipated benefits because many pure and isolated genetic sequences do not exist in exactly the same form in nature—for example, patented sequences may not contain the introns that are found in the naturally occurring material.

• Claims to genetic materials in their natural form (that is, in situ) do not constitute patentable subject matter.

• Arguments that genetic materials are not patentable inventions do not always take adequate account of the fact that—in addition to the threshold requirement of ‘patentable subject matter’—a number of statutory requirements must be satisfied for patent protection to be obtained. In particular, patent protection cannot be conferred over genetic materials unless a use for such materials has been identified and fully disclosed.

• It would be difficult, on any rational basis, to confine reform to genetic materials and technologies, yet the extension of the reform to other fields—where the patenting of pure and isolated chemicals that occur in nature is uncontroversial—may have unknown consequences.

6.54 The test for patentable subject matter may nevertheless warrant reform. The manner of manufacture test was considered in 1984 by the IPAC Report and in 2000 by the IPCRC, and was endorsed on both occasions. Yet it has become apparent during the course of this Inquiry that there are problems with the test.

6.55 The ALRC is a law reform body whose statutory functions are to bring the law into line with current conditions, remove defects in the law, simplify the law, adopt more effective methods for administering the law, and provide improved access to justice.^[91] From this perspective, it is indeed odd that the key concept of ‘manner of manufacture’ depends on a provision in a 380 year old English statute that has long since been repealed in the jurisdiction in which it was enacted; and that the relevant section of the statute is not reproduced in Australian patent legislation.

6.56 The ALRC recognises the value of maintaining a threshold test for patentable subject matter that is flexible and capable of adapting to developments in technology as they arise. However, it is apparent that the terms of s 6 of the Statute of Monopolies 1623 are ambiguous and obscure. In some circumstances, the case law that has evolved around the meaning of this provision offers no further clarification. For example, the grant of letters patent under s 6 does not extend to any manner of new manufacture that is ‘generally inconvenient’. As discussed in Chapter 7, Australian courts and IP Australia have been reluctant to rely on this proviso to deny patent protection to particular inventions. However, it has been suggested that the generally inconvenient proviso could provide a basis for excluding inventions from patentability on ethical or social grounds. The circumstances in which this might be justified are, however, unknown. In addition, the discussion of the usefulness requirement later in this chapter indicates that, while the usefulness of an invention is an aspect of the manner of manufacture test and relevant to the disclosure requirements, the way in which the requirements interact in practice is unclear.

6.57 In the light of the ALRC’s Terms of Reference, any general reform of the way in which Australian patent law should approach the concept of patentable subject matter is beyond the scope of the current Inquiry. It would involve an in-depth analysis of the way in which the manner of manufacture test has been applied to a broad range of inventions—not merely those involving genetic materials and technologies—and require consultations with a more diverse group of stakeholders.

6.58 The ALRC believes that an independent review of the manner of manufacture test is desirable and could be undertaken by a body such as the Intellectual Property Research Institute of Australia (IPRIA), or ACIP. Such a review should focus particularly on the generally inconvenient requirement, including the extent to which this requirement has been invoked by patent examiners and in challenges to patent rights, and whether there are alternative and preferable ways to formulate a threshold requirement for patentable subject matter. Any reform of the manner of manufacture test should take into account the recommendations of this Inquiry, including those relating to the requirement of usefulness (see Recommendations 6–3 and 6–4).