Category Archives: federal court

Another look at Myriad and the patentability of “genes”

Towards the end of last year, a unanimous decision of the Full Federal Court of Australia in D’Arcy v Myriad Genetics Inc [2014] FCFCA 115, found in favour of Myriad and upheld the first instance decision of the Federal Court that isolated nucleic acids are patentable in Australia.

The position put forward by the appellant D’Arcy was that a sequence of naturally occurring DNA and RNA, even in isolated form, are products of nature that cannot form the basis of a valid patent.

Myriad argued successfully that the sequence of DNA responsible for coding the BRCA1 gene that it had succeeded in isolating from the cell’s nucleus was a patentable “manner of manufacture” under section 18 of the Patents Act 1990 (Cth).  Myriad’s argument centred on an assertion that the isolated nucleic acid differs from nucleic acid found in a human cell chemically, structurally and functionally and the isolation of the nucleic acid will lead to an economically useful result.

However, far from the finding of the Full Court putting this issue to rest, D’Arcy’s application to appeal the finding of the Full Court was successful, meaning that the High Court of Australia will be considering the issue. According to the solicitors for D’Arcy this is scheduled to take place in April 2015.

The decision to allow the appeal is an important one for a number of reasons:

  • firstly, it is clear that the High Court considers this question to be one of such importance as to require a serious reconsideration and a definitive resolution from Australia’s highest court, especially as the decision to allow the appeal was given in the face of the unanimous decision of the judges of the Full Court of the Federal Court and the judge of the Federal Court at first instance;
  • secondly, it potentially opens the door for the High Court to take a view on the patentability of isolated nucleic acids in Australia which conforms with that in the USA, where an isolated gene sequence is not currently patentable; and
  • finally, the flow-on effects to the biotechnology industry in Australia will be of serious concern, both in terms of the revenue potential of patents, as well as the funding of research and development into this area if a return on that investment will be difficult to obtain.

In its media release of 13 February 2015 on the successful application to appeal, Maurice Blackburn, the solicitors for D’Arcy, stated that the issue “has enormous significance for access to genetic testing, research and the development of treatments for diseases suffered by millions of Australians.” While this statement is intended to demonstrate reasons why the High Court should overturn the decisions of the lower courts, to me it could also be used to support the Full Court’s decision. If researchers are not able to patent the isolated nucleic acids which are the fruits of considerable scientific endeavour and effort, would the impetus to carry out this research and development exist? The failure of research in this area would indeed have significance on access to genetic testing in that the testing would not be available.

The media release further states that the issue for consideration by the High Court “raises a number of ethical, philosophical and legal questions about the commercialisation of the human body” and indeed it does. However, in my view, and, it seems, in the few of the Full Court, these are issues for the consideration of Parliament and not the High Court.

While I fully appreciate that the statements in this media release are not legal argument, they do serve to paint a useful picture of the way that these issues are considered outside of a legal forum. Written submissions are already being made to the High Court by the parties in this matter, and the Institute of Patent and Trade Mark Attorneys of Australia has sought leave to intervene as amicus curiae, and so we wait with baited breath for its decision.

Elizabeth Campbell

You may have an exclusive licence but are you really an “exclusive licensee”?

Do you have rights to exploit patented technology as an exclusive licensee? It is common for companies in the life sciences industry to give and take licences to patented technology on an exclusive basis, allowing the exclusive licensee to exploit the technology to the exclusion of all others, including the licensor.

The advantages of this model include providing the licensor a revenue stream for its technology when it is not in a position to exploit the technology for itself, and allowing the exclusive licensee access to existing technology that it can use in its business without requiring additional R&D investment. An important part of this exclusive arrangement is that it puts the exclusive licensee, in many respects, in the position of the technology owner: no other person, including the technology owner, is permitted to exploit the technology and, under the Patents Act 1990 (Cth) (the Act)the exclusive licensee is permitted to bring an action against an patent infringer in its own name, giving it the important right to protect its investment in the licensed technology and its business.

However, the recent full Federal Court decision of Bristol-Myers Squibb Company v Apotex Pty Ltd [2015] FCAFC 2, provides some additional insight into what is an exclusive licensee under Australian law which will have repercussions for the way in which rights to patented technology are drafted in licensing agreements.

Under the Act, an “exclusive licensee” is defined to mean:

…  a licensee under a licence granted by the patentee and conferring on the licensee, or on the licensee and persons authorised by the licensee, the right to exploit the patented invention throughout the patent area to the exclusion of the patentee and all other persons.

In its decision, the full Federal Court found that Bristol-Myers Squibb (BMS) was not an exclusive licensee of an Australian patent relating to the compound aripiprazole and processes for its preparation, and therefore had no standing to sue Apotex for infringement of this patent. This is because the licence agreement between BMS and Otsuka granted BMS an “exclusive licence” to advertise, market, promote, sell and distribute the compound aripiprazole but, crucially, reserved for the patentee the exclusive worldwide right to manufacture aripiprazole.

The full court of the Federal Court agreed with the primary judge who held in the first instance that there can be only one “exclusive licensee”, and therefore as the licence reserved the right to manufacture for the patentee, BMS was not an “exclusive licensee”. The court  did not accept the argument of BMS that it could be an exclusive licensee with respect to some rights and not in relation to others, holding that the right to exploit is a single indivisible right.

While the type of licence entered into by BMS is not unusual and likely met the commercial needs of the parties at the time, the takeaway point of this important case is as follows: if you wish to have the right to bring an action in Australia against a patent infringer to protect your investment in the patented technology, then you must be an “exclusive licensee” under Australian law. That is, your right to exploit the patent must be indivisible and exclude any rights to any other person, including the patentee.

Something to think about in your next licence!

Elizabeth Campbell