Usefulness

6.98 There has been considerable debate about whether isolated genetic materials of various types fulfil the requirement that an invention be ‘useful’. For example, the Nuffield Council has noted that:

Since the development of large-scale DNA sequencing techniques over the past ten years, more DNA sequences have become available without a concomitant understanding of their function. As a result, many patent applications have been filed on genes or parts of genes without the demonstration of a ‘credible utility’.^[159]

6.99 In particular, concerns have been expressed that inventions involving ESTs and single nucleotide polymorphisms (SNPs) may not display the requisite usefulness for patentability.^[160] ESTs and SNPs may be used to identify previously unknown genetic sequences or as templates for expressing and characterising proteins for the purposes of further research. Questions have been raised about whether such uses should be sufficient to satisfy the concept of usefulness.^[161]

6.100 Gene patents have also been criticised on the basis that they capture for a patent holder ‘any number of possible applications even though those uses may be unattainable and unproven’.^[162] In relation to this requirement under United States law, it has been proposed that ‘claim scope should be limited to uses that are disclosed in the patent application and that allowing claims to DNA itself would enable the inventor to assert claims to “speculative” uses of the DNA that were not foreseen at the time the patent application was filed’.^[163]

Usefulness requirement in Australia

6.101 Australian patent law requires that an invention be ‘useful’, both as an express requirement in s 18 of the Patents Act and as an implicit requirement that an invention be a manner of manufacture. The usefulness of an invention may also be considered in determining whether the disclosure requirements in s 40 have been satisfied.

6.102 As interpreted by Australian courts, the express requirement of usefulness in s 18 has a limited meaning. It requires only that the patent must produce the results that are promised upon a fair reading of the specification, and that the end in itself is useful.^[164] Nicol and Nielsen have commented that the usefulness criterion does not require that an invention be useful in the sense that it is worthwhile or commercially practical; only that if a particular result is claimed, it must be achievable.^[165]

6.103 The manner of manufacture requirement in s 18 has also been interpreted to include an assessment of the usefulness of an invention. In NRDC, the High Court stated that to constitute a manner of manufacture an invention ‘must be one that offers some advantage which is material’ and ‘its value to the country is in the field of economic endeavour’.^[166]

6.104 IP Australia’s Manual indicates that an invention claimed in a patent application may not satisfy the manner of manufacture test if it fails to indicate a specific use or practical function:

Since an application must be in respect of a manner of manufacture, it is essential that the specification indicates an area of usefulness for the invention claimed, where such use is not self-evident. Where no such use is described (implicitly or explicitly), the claims might be directed to a mere scientific curiosity, discovery or idea.^[167]

6.105 In the context of genetic sequences, the Manual notes:

if a claim defines a DNA sequence, it would be insufficient to describe the sequence as being broadly useful as a ‘probe’. The specification must disclose a specific gene which can be probed by the DNA sequence or a specific use.^[168]

6.106 The usefulness of an invention may also be considered indirectly pursuant to the requirement in s 40 of the Patents Act that a complete specification fully describe the use of the invention and how it can be achieved. If the invention cannot be achieved on the basis of the description in the specification and requires unreasonable experimentation to make it work, it might fail to satisfy this sufficiency requirement.^[169] Further, if a use for the invention described in the claims is not reasonably supported by the description, the claims in the patent application may not be fairly based.^[170]

6.107 Currently, the usefulness of an invention is not an express requirement for examination of an Australian patent application. Usefulness is addressed at the examination stage only as an aspect of the manner of manufacture test and through the disclosure requirements. The Commissioner of Patents does not have to be satisfied that an invention is useful under s 18(1)(c) before accepting a patent application.^[171] ‘Lack of utility’ (as the objection is phrased) can be raised as an express objection only in revocation proceedings.^[172] It is not a separate basis upon which a patent may be opposed or re-examined.^[173] There may, however, be scope to raise the usefulness of an invention claimed in an accepted application in opposition proceedings on the basis of failure to satisfy the manner of manufacture or disclosure requirements.^[174]

Approach to usefulness in other jurisdictions

6.108 In other jurisdictions, the requirement that an invention be useful is more clearly expressed and is relevant in the examination of a patent application.

United States

6.109 Under United States law, the requirement is known as ‘utility’.^[175] United States courts have held that in order to satisfy the utility requirement, a patent application must disclose an invention that is ‘practically useful’. In Brenner v Manson, the United States Supreme Court held that ‘unless and until a process is refined and developed to the point of a substantial utility—where a specific benefit exists in currently available form—there is insufficient justification for permitting an applicant to engross what may prove to be a broad field’. The Supreme Court also stated that an invention that ‘either has no known use or is useful only in the sense that it may be an object of scientific research’ is not patentable.^[176]

6.110 In 2001, the USPTO issued revised examination guidelines setting out the way in which the utility requirement should be applied by United States patent examiners (US Revised Utility Guidelines).^[177] The guidelines have now been incorporated into the USPTO’s Manual of Patent Examining Procedure (MPEP).^[178] The US Revised Utility Guidelines require a patent applicant to demonstrate a utility for an invention that is ‘specific, substantial and credible’.^[179] A patent applicant will demonstrate a ‘specific and substantial’ utility where ‘any particular practical purpose’ for the claimed invention is stated in the application, so long as such purpose is not ‘throw-away’, ‘insubstantial’ or ‘non-specific’.^[180] The utility of the invention must be ‘specific’ to the subject matter claimed, not a ‘general utility that would be applicable to the broad class of the invention’.^[181] A ‘substantial’ utility is one that defines a ‘real world’ use; that is, no further research is required to identify an immediate benefit.^[182] The requirement that the utility claimed for an invention is ‘credible’ will be satisfied if it is believable to a person of ordinary skill in the art, based on the totality of evidence and reasoning provided.^[183]

6.111 The USPTO has indicated that an application claiming a purified and isolated genetic sequence may satisfy the utility requirement if ‘it can be used to produce a useful protein or it hybridises near and serves as a marker for a disease gene’.^[184]

Europe

6.112 Under European law, the criterion of usefulness takes the form of a requirement that an invention must be ‘capable of industrial application’.^[185] The EPC further provides that an invention shall be considered susceptible of industrial application if it can be made or used in any kind of industry, including agriculture.^[186] Additional requirements apply with respect to the industrial applicability of inventions relating to the sequence or partial sequence of a gene, following the implementation of the EU Biotechnology Directive.^[187] Article 5(3) of the Directive requires a patent applicant to disclose the industrial application of a sequence or partial sequence of a gene.^[188]

6.113 In December 2003, the EPO issued revised examination guidelines that address the ‘industrial applicability’ requirement for inventions involving genetic sequences:

A mere nucleic acid sequence without an indication of a function is not a patentable invention … In cases where a sequence or partial sequence of a gene is used to produce a protein or a part of a protein, it is necessary to specify which protein or part of a protein is produced and what function this protein or part of a protein performs. Alternatively, when a nucleotide sequence is not used to produce a protein or part of a protein, the function to be indicated could [for example] be that the sequence exhibits a certain transcription promoter activity.^[189]

Adoption of specific, substantial and credible utility in other jurisdictions

6.114 Several jurisdictions have endorsed the approach adopted by the US Revised Utility Guidelines, and interpret the requirement of utility (or industrial application) as requiring an applicant to disclose a ‘specific, substantial, and credible’ use for a claimed invention. For example, guidelines issued by the United Kingdom Patent Office relating specifically to biotechnological inventions (UK Biotechnology Examination Guidelines) state that ‘a “specific, substantial, and credible” utility, is arguably the sort of disclosure, relating to industrial application that we would expect to appear in a UK application’.^[190] The UK Biotechnology Examination Guidelines also indicate that this approach has been followed in the EPO to date.^[191] Further, a 2003 report of the New Zealand Ministry of Economic Development recommended that usefulness should be a specific criterion that must be satisfied before a patent is granted under New Zealand law, and that the usefulness must be credible, specific, and substantial.^[192]

Criticism of the specific, substantial and credible utility standard

6.115 Some criticisms have been levelled at the standard adopted in the US Revised Utility Guidelines. The Nuffield Council considered that the standard of utility established by the Guidelines is too low,^[193] and suggested that a ‘credible’ utility merely required an applicant to claim a ‘theoretically possible’ purpose.^[194] Given the state of genetic science and the ability to hypothesise the function of genetic material on the basis of homology with other species, the Nuffield Council considered that a theoretical purpose should not be a sufficient basis on which to award a patent.^[195]

6.116 The US Revised Utility Guidelines have also been criticised for failing to address adequately whether a patent should be granted if the application discloses only a single useful function for a gene. However, the MPEP expressly states that ‘an applicant need only provide one credible assertion of specific and substantial utility for each claimed invention to satisfy the utility requirement’;^[196] that is, the applicant is not required to demonstrate that all possible uses of the invention claimed in a patent application satisfy the standard of ‘specific, substantial and credible’ utility. The UK Biotechnology Examination Guidelines have been said to adopt a similar approach.^[197]

Reform of the usefulness requirement under Australian law

6.117 In 2000, the IPCRC stated that the manner of manufacture and ‘utility’ criteria ‘have taken on greater importance in some new areas of technology, particularly biotechnology, where the dividing line between mere discovery and invention has become more difficult to define’. The IPCRC concluded that references to ‘use’ or ‘utility’ in current Australian law might conflict. The IPCRC considered that ‘it has not always been clear how this requirement [to demonstrate a defined use for an invention] has been imposed’. It stated that the extent to which s 40 requires a patent application to contain a ‘clear statement’ of use or utility is not currently evident.^[198]

6.118 Seeking to address these concerns, the IPCRC endorsed the approach adopted by the USPTO in the US Revised Utility Guidelines and recommended that IP Australia should ensure that ‘the use described in the specification is specific, substantial and credible to a person skilled in the art’.^[199] The IPCRC did not, however, recommend specific changes to the Patents Act or the Patents Regulations 1991 (Cth)(Patents Regulations).

6.119 In response to the IPCRC’s recommendations, the Australian Government indicated that it would ask IP Australia to ensure that examinations of patent applications address all aspects of the use of an invention being specific, substantial and credible.^[200] However, the Government noted that the ‘specific, substantial and credible’ test is already broadly included within current examination practice under the manner of manufacture and ‘fair basis’ requirements.^[201]

6.120 As noted above, IP Australia’s Manual does not explain how the standard of ‘specific, substantial and credible’ use is incorporated into the requirements for patentability under Australian law. However, IP Australia informed the ALRC that it is in the process of amending the Manual to address this issue.^[202]

6.121 Nicol and Nielsen have suggested that a ‘specific, substantial and credible requirement marks a radical change from the previous interpretations of the usefulness criterion by the Federal Court’.^[203] Nicol and Nielsen stated that amendments to the Patents Act and Patents Regulations may be required to implement the recommendation of the IPCRC effectively.^[204] They also suggested that s 45 of the Patents Act may need to be amended to allow patent examiners to consider the usefulness of an invention in examining an application.^[205] Alternatively, they proposed that the Patents Regulations could be amended to require utility to be considered at the examination stage.^[206]

6.122 Amendments to the current approach to usefulness under Australian law may also be required to implement the provisions of the Australia–United States Free Trade Agreement (AUSFTA).^[207] The AUSFTA provides that ‘a patent may only be revoked on grounds that would have justified a refusal to grant a patent’.^[208] In order for lack of utility to be retained as a ground upon which a patent may be revoked, the Patents Act may need to be amended to make usefulness under s 18(1)(c) a ground of examination or opposition. In addition, the AUSFTA provides that ‘each Party shall provide that a claimed invention is useful if it has a specific, substantial, and credible utility’.^[209] While this provision does not require ‘specific, substantial and credible utility’ to be the sole basis on which a patent may satisfy the requirement of usefulness,^[210] the implementation of the AUSFTA provides an opportunity to clarify the operation of the usefulness requirement in Australian law.

Submissions and consultations

6.123 Many submissions expressed concern about the grant of patents over genetic inventions, where the use of such inventions is unknown or speculative.^[211] For example, the RCPA stated that: ‘One of the major problems relating to the utility of genes is that we do not know the varied roles of most genes and claims about their actual or potential utility are largely grounded in ignorance’.^[212]

6.124 To address this issue, DP 68 proposed that the Patents Act should be amended to: (a) include usefulness as a specific requirement that must be satisfied before a patent is granted; (b) require the Commissioner of Patents to be satisfied on the balance of probabilities that the usefulness criterion is made out; and (c) include lack of usefulness as a basis upon which a patent application may be opposed, in addition to its current role as a ground for revocation.^[213]

Examination of the usefulness requirement

6.125 A wide range of submissions and consultations supported including usefulness as a separate ground upon which a patent application should be examined.^[214] Submissions suggested that usefulness is an important issue, but there is confusion about the significance of this requirement and how it currently operates.^[215] The South Australian Department of Human Services considered that the usefulness requirement should ‘stand apart from the “manner of manufacture” test so that it is given clear and specific focus’.^[216]

6.126 Submissions indicated that requiring usefulness to be considered at the examination stage could address concerns about patent applicants claiming theoretical or speculative uses for an invention without substantiating such assertions.^[217] Others suggested that it could also assist in addressing concerns about inappropriately broad patent claims.^[218] The weight of opinion considered that any change should apply to inventions involving all types of technology, not only genetic materials and technologies.^[219]

6.127 In its submission, IP Australia indicated that it could ‘foresee no particular difficulties’ with the ALRC’s proposals. It also noted that, in responding to the report of the IPCRC, the Australian Government ‘asked IP Australia to ensure that examination covers all aspect of use being specific, substantial and credible’.^[220]

6.128 However, some submissions considered that the usefulness of a claimed invention is already adequately addressed in Australian patent law.^[221] The Centre for Law and Genetics, while agreeing that the requirement of usefulness should be relevant at the examination stage, perceived difficulties with the reforms proposed by the ALRC. The Centre considered that, given the existing body of case law interpreting s 18(1)(c) of the Patents Act, extending the requirement of usefulness in the manner contemplated by the ALRC could cause confusion. The Centre proposed that the standard of specific, substantial and credible utility could be considered as part of the manner of manufacture requirement, or by amending the Patents Regulations to include ‘specific, substantial and credible utility’ as a prescribed matter to be addressed by a patent examiner.

6.129 Other submissions identified concerns about the usefulness requirement being considered at the examination stage. For example, a firm of patent attorneys, F B Rice & Co submitted that requiring usefulness to be addressed at the examination stage would mean that an examiner ‘will need to be educated … as to the background, development, object and outcome potential of an invention’. F B Rice & Co also suggested that the costs of examination could increase as a result of applicants having to provide ‘substantial evidence from experts or the like in the industry’.^[222] Other submissions considered that examination of the usefulness requirement might delay the publication of an invention,^[223] or deter inventors from using the patent system.^[224]

6.130 Some submissions considered that the scope of the monopoly conferred by a gene patent should be limited to the uses for a genetic invention that are disclosed in a patent specification.^[225] Associate Professor Ross Barnard submitted that ‘applicants should not be allowed to claim all possible (including unknown) future uses of a particular nucleic acid (or derived protein) sequence’.^[226] The Queensland Government stated that ‘all patents should demonstrate a commercial or industrial use, and a monopoly granted only in relation to the use(s) disclosed in the patent application’.^[227] The Walter and Eliza Hall Institute of Medical Research considered that it might also be acceptable to include ‘credibly predicted uses that would be an obvious extrapolation from the examples in the patent’.^[228]

6.131 However, F B Rice & Co submitted that ‘whilst a patent application with masses of experimental data to support each and every claim would be optimal, this is not a realistic scenario’.^[229] They suggested that such a requirement may be particularly problematic in relation to claims relating to ‘methods of treating diseases’ in humans because obtaining such data involves the time and effort of substantial experimentation in cellular or animal models before human trials are able to be conducted.

Balance of probabilities standard

6.132 DP 68 proposed that a single ‘balance of probabilities’ standard of proof should apply to all the requirements for patentability relevant at the examination stage.^[230] Submissions that commented on this issue are addressed in Chapter 8, which makes a recommendation on similar terms to those proposed in DP 68.^[231] In addition, a number of submissions specifically commented that patent examiners should be satisfied on the balance of probabilities that the requirement of usefulness has been made out in order to accept a patent application.^[232] For example, the Department of Health and Ageing indicated that the adoption of a balance of probabilities standard will ‘assist in restricting speculative use claims in gene patent applications’.^[233] In contrast, the Institute of Patent and Trademark Attorneys (IPTA) submitted that ‘it is unlikely that an Examiner will necessarily be in a position to make a final determination on the issue of usefulness and the establishment of a high standard in this regard … may provide an impediment to the grant of patent protection’.^[234]

Grounds for challenge

6.133 A range of submissions supported amending the Patents Act to permit patent applications to be opposed on the basis of lack of usefulness.^[235] A number of submissions considered that usefulness should also be grounds for re-examination of a patent.^[236] However, IP Australia submitted that usefulness should, at most, be a basis upon which a patent may be opposed:

Assessment of use may be conducted as part of the opposition process without any obvious difficulty, as the process is designed to deal with higher evidentiary burdens. [However,] re-examination is similar to the examination process, in that it is conducted ex parte and is not designed to consider evidence to the extent that would be required for a thorough assessment of use.^[237]

6.134 Other submissions suggested that adding usefulness as a basis upon which a patent may be opposed (or re-examined) would have limited effect.^[238] The South Australian Government commented that, as most genetic material is already protected by patents, amendments to the grounds for opposition of a patent may not have a significant impact.^[239] Others noted that it was unlikely that a challenge would be initiated against a patent that was not useful.^[240] In addition, McBratney and others suggested that usefulness did not need to be added as a specific ground upon which a patent may be opposed because such an objection may already be raised as part of the manner of manufacture test.^[241]

Examination Guidelines

6.135 DP 68 also proposed that IP Australia develop examination guidelines to assist patent examiners in applying the usefulness requirement and that the guidelines should require that the usefulness must be ‘specific, substantial and credible’ to a person skilled in the relevant art.^[242]

6.136 The development of guidelines relating to the usefulness requirement was supported in a large number of submissions and consultations.^[243] For example, the South Australian Department of Human Services commented that guidelines ‘would assist patent examiners to adopt a common and uniform basis for assessment’.^[244] Many submissions endorsed the proposition that patent applications should disclose a utility for the claimed invention that is ‘specific, substantial and credible’.^[245]

6.137 A few submissions suggested that the content of the usefulness requirement should be made clear in legislation.^[246] In particular, IPRIA commented that requiring the usefulness of an invention to be ‘specific, substantial and credible’ to a person skilled in the relevant art is a significant change from the Federal Court’s interpretation of the usefulness requirement in s 18(1)(c) of the Patents Act and that amendments to the Act would, therefore, be required to implement such a change.^[247] IPRIA considered that guidelines would be insufficient to effect this reform because they are merely suggestive of the application of patent law principles, and do not bind the courts in interpreting the Patents Act. However, IPRIA considered that examination guidelines could also be developed to explain the criterion of usefulness further and to give practical examples of how it would be applied. IPTA submitted that any guidelines developed by IP Australia should be confined to procedures for examination.^[248]

ALRC’s views

6.138 The ALRC considers that reform is needed to the way in which the usefulness of an invention is addressed in the requirements for patentability. It was evident from submissions and consultations early in the Inquiry that there is considerable confusion about the application of the usefulness requirement. These misunderstandings relate to the extent to which an invention claimed in a patent application must be useful; how such a requirement is imposed; the standard for satisfying this requirement; and the extent to which usefulness can or should limit the scope of patent claims.

6.139 While usefulness is an important consideration in awarding patent protection for inventions involving all types of technologies, the ALRC endorses the view expressed by the IPCRC that the criteria of manner of manufacture and ‘utility’ have taken on a greater importance in new areas, such as biotechnology, where the dividing line between mere discovery and invention has become difficult to define.^[249]

6.140 Reform of the usefulness requirement would clarify IP Australia’s assessment of the function and use of genetic material claimed in a patent application. However, adopting specific provisions in relation to genetic materials and technologies is generally undesirable. The present approach of the Patents Act is essentially technology-neutral and is capable of accommodating inventions in new technological fields as they arise. Implementing specific patentability requirements for genetic materials and technologies would diverge from the approach adopted in most other jurisdictions and may conflict with Australia’s obligations under the TRIPS Agreement. The ALRC’s recommendations in relation to the usefulness requirement are not, therefore, limited to inventions involving genetic materials and technologies.

6.141 The ALRC considers that Australian patent examiners should examine, and report on, the usefulness of an invention disclosed in a patent application as a separate requirement, and not merely as one of a number of considerations in determining whether an invention satisfies the manner of manufacture and disclosure requirements in ss 18 and 40 of the Patents Act.

6.142 The standard of usefulness disclosed in an application should satisfy the ‘specific, substantial and credible’ test endorsed by the IPCRC and confirmed in the AUSFTA. The ALRC agrees with submissions that suggested this test should be included in the Patents Act because it represents an important change to the way in which the usefulness requirement has historically been interpreted. Further, the ALRC considers that the usefulness requirement should be satisfied only if a ‘specific, substantial and credible’ use for the invention is disclosed. Such reforms would make Australian law consistent with approaches to usefulness adopted in other major jurisdictions. In addition, such a standard would preclude a patent being granted over a genetic invention when further research or investigation is required to understand whether the invention has a practical application.

6.143 In Chapter 8, the ALRC recommends that a single standard of proof should apply to all requirements for patentability assessed by patent examiners (see Recommendation 8–3). As discussed in that chapter, requiring different standards of proof for the patentability criteria—as currently provided in s 49 of the Patents Act—adds unnecessary complexity to the assessment of patent applications. The ALRC considers that the balance of probabilities standard should also apply to the requirement of usefulness. This reform may go some way to addressing concerns that the disclosed use of a genetic invention may be speculative.

6.144 The ALRC considers that challenges to patent rights on the basis of lack of usefulness of an invention should not be confined to post-grant proceedings by way of revocation. As discussed in Chapter 9, opposition proceedings may be initiated before a patent is sealed and may result in the narrowing or withdrawal of patent claims, or a determination not to allow an accepted application to be sealed. The ALRC recommends that the grounds for opposition set out in the Patents Act should be amended to include lack of usefulness. This would allow third parties to adduce evidence that may not have been available to the examiner during examination.

6.145 On the other hand, the ALRC does not believe that any significant benefit would result from including lack of usefulness as a new basis for re-examination. Re-examination is not significantly different in form to the examination of a patent application. The process is conducted ex parte and based largely on documentary evidence, albeit at a later stage in the life of a patent or patent application.

6.146 The ALRC considers that IP Australia should develop guidelines to assist patent examiners in applying the proposed usefulness requirement. Such guidelines could be included in IP Australia’s Manual, which sets out relevant considerations in applying the requirements for patentability to inventions involving all types of technology. However, the ALRC considers that the examination guidelines relating to biotechnological inventions—which are recommended in Chapter 8—should specifically address the application of the usefulness requirement to biotechnological inventions. Materials developed by the USPTO in conjunction with the US Revised Utility Guidelines could serve as a helpful resource to IP Australia in formulating examination guidelines relating to the usefulness requirement.

Effect of reforming the usefulness requirement

6.147 A number of submissions suggested that a gene patent should confer a monopoly on the patent holder only in relation to those uses of an invention that are disclosed and demonstrated.

6.148 The law in this area is complex and there was some uncertainty in submissions about the way in which the usefulness requirement applies. As discussed above, the usefulness of an invention is a separate requirement for patentability under s 18(1)(c) of the Patents Act, but it is also relevant in determining whether an invention satisfies the manner of manufacture test and the disclosure requirements.^[250] In addition, the ‘use’ of a patented invention is one of the rights conferred upon a patent holder as part of its exclusive right ‘to exploit’ the invention.^[251]

6.149 In recommending reforms to the usefulness requirement, the ALRC has not adopted suggestions that the usefulness requirement be amended to ensure that the scope of the monopoly conferred by a gene patent is limited only to those uses for a genetic invention that are disclosed in a patent specification. The usefulness criterion recommended by the ALRC would require a patent examiner to assess whether an invention has a commercial or industrial application, but so long as an applicant discloses a use, the requirement will be satisfied. The ALRC does not believe that a more extensive amendment of the usefulness requirement is either necessary or desirable to address concerns about the scope of the monopoly conferred by a gene patent.

6.150 To adopt a reform that would to limit a patent holder’s monopoly to those uses that are disclosed in a patent specification is unlikely, in practice, to achieve the result sought by those who advocate this approach. This is because most of the gene patents that are perceived to be problematic have already been granted, while any amendments to the Patents Act would only affect gene patents granted in the future. Moreover, most human genetic sequences are now in the public domain as a result of the Human Genome Project. In the future, it is likely that gene patents will be granted only over new uses for human genetic sequences, rather than over the sequences themselves.^[252]

6.151 The suggestion is also premised upon confusion between the patentability requirements and the scope of rights conferred on a patent holder by the grant of the patent. The grant of a patent over a genetic product gives the patent holder the right to exploit the product. This entitles the patent holder to make, hire, sell, use or import the product for whatever purposes it may lawfully be used, even if the potential applications of the product are not known at the time a patent is granted.

6.152 Limiting the scope of exclusive rights conferred by a gene patent would be a radical departure from the existing patent system. It would involve treating gene patents differently to patents over other technologies because applicants for gene patents would need to satisfy more stringent patentability requirements. For the reasons set out earlier in this chapter, the ALRC does not favour this approach.

6.153 Further, the TRIPS Agreement limits the extent to which Australian patent law may restrict the rights conferred by a patent.^[253] Article 28 requires that, in the case of a patented product, a patent holder shall have the right to prevent third parties from ‘making, using, offering for sale, selling or importing’ the patented product.^[254] Article 30 permits member States to provide limited exceptions to the exclusive rights conferred by a patent provided such exceptions do not unreasonably conflict with the ‘normal exploitation of the patent and do not unreasonably prejudice the legitimate interests’ of a patent holder.^[255] In the ALRC’s view, limiting the scope of the monopoly conferred by gene patents to those uses of an invention that are disclosed and demonstrated by the applicant is likely to conflict with Australia’s obligations under the TRIPS Agreement.

6.154 The patent system already contains mechanisms to encourage further innovation with respect to a patented invention and to reward third parties who exhibit inventiveness in this regard. A gene patent that claims an isolated genetic sequence or other genetic material per se does not necessarily give the patent holder the exclusive right to exploit all uses of the sequence or material.^[256] Depending on the scope of the claims in the original patent, later patents might be granted to another party for novel and inventive applications of the isolated genetic sequence or other material. In practice, the later patent holder may require a licence from the holder of the patent on the genetic product in order to exploit its invention.^[257] Conversely, the holder of the patent on the genetic product may require a licence in order to exploit the patent on the new application. However, it is difficult to generalise: much will depend on the claims of the particular patents in question.

6.155 To the extent that submissions raised concerns about the scope of the monopoly conferred by a gene patent and its effect on subsequent research and innovation, these concerns are addressed by reforms recommended in other chapters of this Report, including the introduction of an experimental use exemption.^[258]