26 Nov 2010

Australia looks at banning patents for biological materials

Australia could be about to ban the patenting of a wide range of biological materials, if the new Patent Amendment (Human Genes and Biological Materials) Bill 2010 is passed.

The Bill seeks to amend section 18 of the Patents Act by extending the current prohibition on patenting human beings, and the biological processes for their generation, to biological materials including their components and derivatives, whether isolated or purified or not and however made, which are identical or substantially identical to, such materials as they exist in nature.

"Biological materials" will include DNA, RNA, proteins, cells and fluids – which is pretty far-reaching by itself – but is not limited to these things.

Why is this Bill a problem for the biotech and pharmaceutical industries?

According to the Explanatory Memorandum, the Bill is intended to advance medical and scientific research by reducing the cost of accessing biological materials. However, one might also argue that the Bill will have the reverse effect and will discourage investment in R & D if any biological product that is developed can be copied by all and sundry.

While the cost of accessing otherwise patented biological materials would be removed, the Bill would have two significant effects:

  • an important incentive for doing research and development – commercialisation via patenting – would be lost; and
  • the bill is not expressed to apply to future patents only. The exclusion potentially operates retrospectively so that already patented biological materials would lose their patent protection. If so patent owners would lose a revenue stream which funds their research and development. There are currently proceedings before the High Court to determine whether a reduction in the scope of intellectual property rights, in particular copyright, may be unconstitutional (see Phonographic Performance Company of Australia Ltd v Commonwealth of Australia). Similar issues may arise in relation to this Bill, if it becomes law.

Only material that is "substantially identical" to material that exists in nature is excluded. While this is a well developed concept with respect to trade marks, the same cannot be said for patents. It is unclear how the test would work in practice, particularly given small changes in DNA sequences can lead to significant differences in biological activity.

How likely is this to pass?

The Bill is a private member's bill, introduced by Senators from the Liberal and Green parties, and one Independent. As the current Federal Government does not have a majority (and depends upon independents and Green MPs) in the House of Representatives, or in the Senate, its prospects of becoming law are better than those of the average private member's bill. However, much will depend on the recommendations of the report of the Senate Committee on the patenting of human genes, due to be delivered today.

 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.