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Monday, 27 February 2012
Page: 884

Senator XENOPHON (South Australia) (21:10): I endorse the remarks of Senator Heffernan and I think we need to put this in perspective. Senator Heffernan indicated just one example: it did not cost taxpayers tens of millions of dollars but hundreds of millions of dollars. That is something that should be addressed in the government's response to the quite serious allegations that Senator Heffernan made in relation to how the patent system in this country is and has been abused. I think Senator Heffernan is right: you see a difference of opinion in the way that these matters ought to be dealt with in terms of our patent laws between the Department of Health and Ageing and IP Australia, which is of course part of the Department of Innovation, Industry, Science and Research and has portfolio responsibility for Australia's IP system. There is a huge gulf between the two. I have seen it in Senate inquiries on related matters to gene patenting. I am a co-sponsor of the bill, along with a number of other senators—coalition and Australian Greens senators and, without verballing Senator Madigan, I think he shares similar concerns in relation to this.

These are important issues. I think it is widely agreed that Australia's patenting system is in need of an urgent overhaul. It could be argued that this bill takes the first steps towards that but does not go far enough. It does not deal with the fundamental issues that have been outlined by Senator Heffernan and additional issues that I will refer to shortly.

I support the government's intention of raising the standard of patents in Australia and I also support the provisions for the bill relating to research, but, again, I wonder whether it actually provides the protection that needs to be provided. Supporting Innovation Australia is vital. If we continue to fail to provide a research exemption in relation to patents, we face more and more companies taking their research work offshore. In particular, it hampers those medical researchers who for altruistic reasons are doing all they can to improve the lives of others through medical breakthroughs. They are tied up. Patents can tie them up in a way that is quite destructive that winds back the cause of genuine medical research. It fetters our science and innovation.

We need to take into account the remarks and tremendous work of Dr Luigi Palombi of the Australian National University Centre for Governance of Knowledge and Development in his submission to the Senate community affairs committee and its inquiry into gene patents. Dr Palombi made it very clear how gene patents negatively impact on the provision and cost of health care, progress and medical research, and the health and wellbeing of Australian people. We should heed his warning and legislate to ensure that genes cannot be patented as an invention. This will ensure that researchers are not impeded in medical research and that Australians are not denied access to healthcare treatments. My question to the parliamentary secretary in relation to this is: to what extent does the government consider that this bill would adequately deal with these issues so that medical research is not fettered, is not impeded, by the unfair use or abuse of patent laws?

I believe that the government needs to consider this bill as only a first step in reforming Australia's patent system. The consultation process for this bill revealed major concerns within interest groups about how the current patent system operates. The general consensus seems to be that this bill is better than no reform at all, but without further reforms we run the risk of losing even more of our best and brightest overseas.

I would like to reflect on some of the concerns that have been outlined by Dr Palumbi. He acknowledges that there are aspects of this bill that are long overdue and positive. It is not all bad, but, really, it is just tinkering around the real problems. I share Dr Palumbi's concern that this bill may not make any real practical difference to how the Australian patent system works, which is currently pathetically poor. I agree with Dr Palumbi's concern about the way the Patents Act 1990 is written. It was drafted by IP Australia, with the help of senior patent attorneys and patent licensing executives from major corporations, so I wonder about issues of potential conflict within the patent system in terms of how the bill was structured.

What are the matters that I think need to be addressed in any future bills? We ought to have all patent applications and granted patents define one single invention in the patent specification. That would be an important reform. Under the current legislation, the patent ability requirements in subsection 18(1) are that the presence of a patentable subject matter, novelty, an inventive step and utility are assessed against each and every claim. Again, I am borrowing directly from the concerns outlined by Dr Palumbi. His concern is that, if a patent has 50 claims, the patent examiners have to look at each and every claim. How much time should that take in order to do it properly? I am concerned that not enough time is being taken. The problem, as we know from IP staffers, is that they do not have the time, and the tendency for patent examiners is to allow the claim rather than to rigorously apply the rules. I do not blame the patent examiners, who I believe diligently do their very best to enforce the law, but they simply do not have the resources or the time to go through some of these applications properly.

The BRCA patents are a perfect example. What is it that Myriad Genetics invented? Was it the BRCA genetic mutations linked to breast cancer? Was it the genetic sequence of the BRCA genetic mutations? Was it the genetic test for BRCA gene mutations? Or was it something else? I agree with Dr Palumbi that by looking at one of the four BRCA patents you can see that they are apparently all related to one invention. I think there is an issue there. Every patent should define clearly and simply what it is that the inventor says the invention is. In the BRCA patent example, why did Myriad have four patents if the invention was a BRCA genetic test? Why did they have 30 claims alone in just the first of the four patents? And why did they include claims to BRCA genes and proteins if they did not invent them? These are the questions posed by Dr Palumbi and I believe they ought to be answered.

There are other matters that need to be dealt with. The test should be that all patent ability thresholds are assessed against the one invention, as defined in the patent specification. This will save much time, as the patent examiners can then focus on that invention. That is a necessary and important reform. There ought to be antiavoidance provisions inserted in our patent laws. It is a bit like the tax act in that, if patent attorneys know that they are crossing the line, if they are overreaching in a way that stifles innovation or in a way that unfairly knocks out competition, then they could be subject to prosecution and fines at the very least. There needs to be a definition of patent abuse and it needs to be a crime to be involved in patent abuse. It is a controversial issue that has been raised by Dr Palumbi and I agree with him. If you hold back essential research when dealing with breast cancer, or any cancer, to me that is untenable. We need to have clear antiavoidance provisions. Patents are like taxes in reverse in that, unlike the tax act, in which the government gets the money, it is private individuals and companies who get the money. Without a patent abuse provision there is no disincentive not to game the system, and my fear is that the system is being gamed.

There ought to be a meaningful objects clause in the Patents Act. There ought to be a meaningful damages provision that enables the Commonwealth or state governments and individuals who are negatively impacted on by a patent that is revoked to recoup the value of the patent monopoly or the damages caused by the patent monopoly. That is what a patent is: it is a monopoly sanctioned by law. It is the only circumstance where a monopoly is allowed by virtue of a patent. So if we are going to grant a monopoly we need to be very careful about the circumstances in which that monopoly is granted. I still remember that quote by Rupert Murdoch, who said, 'A monopoly is a terrible thing, unless you happen to have it.' I think that is something we need to bear in mind in the context of patent law. This is the only form of a sanctioned, legislated monopoly protected by statute that private individuals are allowed to have, and we must grant monopolies for patents very carefully. We must have antiavoidance provisions. We must have a provision to allow for damages following an abuse of that monopoly for those who have been damaged by that monopolistic abuse of this provision.

These are just some of the issues that need to be dealt with. Again, I have borrowed heavily from the wise research and work of Dr Palumbi. We need to heed his concerns regarding the abuses occurring within our Patents Act. This piece of legislation is not unwelcome, but I believe it ought to have gone much further. I would like to think that this is the beginning of further reforms. We should note the tension between the Department of Health and Ageing and IP Australia. The department of health understands what the cost will be to the public health system unless we address these issues comprehensively and unless we comprehensively tackle the issue of abuse of the patent system. I think it was Senator Madigan who helpfully mentioned that we need to look at the cost to people. The cost to people could actually be their lives if we hold back unnecessary research and the cost of essential life-saving medication is much higher than it ought to be because of abuses in the patents system. I commend the work of Minister Carr in relation to this, but I believe we need to go further. I fear that, unless the warnings of Dr Palumbi and others are heeded, unnecessary abuses of our patent laws will continue to lead to adverse outcomes for the Australian people.