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Monday, 19 March 2012
Page: 3422

Ms PARKE (Fremantle) (18:05): I wish to speak today to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011. I commend the work of the former Minister for Innovation, Industry, Science and Research, Senator Kim Carr, and the department for the improvements to the intellectual property system that are contained in the bill. I note with respect to the patent system, in particular, that the bill will have the effect of raising standards in a number of respects. However, there are areas of the existing patent system where the bill does not go far enough and there are areas where it does not go at all—and it is those areas that I would like to speak about today.

First I will address the areas where the bill does not go far enough. For example, the section in the bill on experimental use exemption introduces an explicit provision permitting experimentation to be conducted without infringing patent rights. This was said by the minister in his second reading speech in the Senate to respond to 'concerns that patent rights can sometimes deter or block innovation by discouraging researchers from developing further innovations or spin-offs' and 'the need to set our researchers free and ensure that the patent system encourages further innovation'. However, this exemption applies only as long as what researchers are doing is predominantly for non-commercial experimental purposes.

There appear to be five main problems with this provision. Firstly, the scope of the exemption is too narrow; it does not seem to include non-experimental or other non-commercial purposes, such as clinical, educational, teaching or applied scientific purposes. Secondly, it is very difficult to prove that research has no commercial interest. Most universities have commercial objectives. Thirdly, furthermore, if a researcher using a patented genetic material under the experimental use exemption does manage to invent a useful application relating to that material, he or she would need to pay money and obtain a licence to the patent holder in order to commercialise that invention. This would seem to be a significant disincentive to innovation, to improving what already exists. Fourthly, the bill is ambiguous as to when the research exemption will apply and this will consequently be tested in the courts by multinational corporations with deep pockets. To what extent will small research institutions or individual researchers run the risk of carrying out research that may lead to them being dragged to court against large pharmaceutical corporations, for example? Finally, I note that the WTO TRIPS agreement heavily constrains experimental use exemptions.

These factors together mean, I fear, that the experimental use exemption provision, while admirable in its purpose and intent, will not be effective or practicable for scientists and researchers. Secondly, the bill does not deal with patentable subject matter, a subject of significant interest to health professionals, cancer patients and the wider Australian community. It is a bedrock principle of patent law that there must be an invention. In the health field, true inventions such as medicines, vaccines and new methods for diagnosis are patentable subject matter. However, discoveries of nature are not inventions and have never been patentable subject matter, irrespective of how difficult or useful that discovery may be.

Notwithstanding this principle, the practice over the past more than two decades has been to grant patents over human genes where such genes have been isolated from the human body and to grant patents over diagnostic tests that do not result from any invention but involve mere comparisons of genetic sequences. The effect of the practice of granting patents over human genes has been to lock up genes in the hands of a few, mostly foreign, corporations that can then refuse or control access to the genes.

In July 2008 an Australian company, Genetic Technologies, which had acquired the exclusive patent rights to a number of Australian patents granted to Myriad Genetics over breast and ovarian cancer susceptibility, or BRCA, genes, wrote to all of Australia's publicly funded clinical laboratories demanding that they immediately cease providing Australian women with BRCA genetic testing or they would be sued for patent infringement. In September 2010 the ABC Four Corners program Body Corporate highlighted the fact that doctors at Westmead Hospital were sending children's DNA samples to Scotland for epilepsy testing rather than paying the fees and royalties demanded by Genetic Technologies, which holds the patent rights for the epilepsy gene and genetic test.

During the recent Senate Community Affairs References Committee inquiry into gene patents, the Peter MacCallum Cancer Centre gave evidence that its research into breast and ovarian cancer had been delayed by two years and ended up costing three times as much because gene patents holders, Myriad and Genetic Technologies, refused to grant it permission to use the genes in its research. As Professor Bowtell from the Peter MacCallum Cancer Centre said during the inquiry:

We are coming into an era where lots of genes are actually being identified that work in concert to actually cause an outcome, like the risk of developing breast cancer, diabetes, stroke … If the patents for each of those genes are held by different companies then it is going to be extremely difficult to assemble a practical test to test for a particular condition.

The fact is that knowledge about human genes belongs to everyone. This is why when the human genome was decoded 12 years ago US President Clinton and British Prime Minister Blair issued a joint statement that said:

… to realise the full promise of this research, raw fundamental data on the human genome, including the human DNA sequence and its variations, should be made freely available to scientists everywhere. Unencumbered access to this information will promote discoveries that will reduce the burden of disease, improve health around the world and enhance the quality of life for all humankind.

This principle has been recognised by the United States government, which in the past two years has revised its policy on the patentability of genetic material, saying in an amicus curiae submission to a court challenge to Myriad's gene patents:

The extent to which basic discoveries in genetics may be patented is a question of great importance to the national economy, to medical science, and to the public health.

…   …   …

The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is 'isolated' from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth.

…   …   …

Methods of identifying, isolating, and using such DNA molecules may be patented, as may any new and useful alteration of those molecules through human intervention. Genomic DNA itself, however, is a product of nature that is ineligible for patent protection, whether or not claimed in 'isolated' form.

We acknowledge that this conclusion is contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA.

So, the US government now considers that the practice of the US Patent and Trademark Office, which has been followed by IP Australia for more than two decades, is wrong. This is significant.

The US Supreme Court may rule on this in the coming years. A court case by breast cancer patient Yvonne D'Arcy and Cancer Voices Australia is underway in Australia challenging Myriad's patents over the breast and ovarian cancer genes. But it will be some time before it is decided. In my view it is time for this parliament to fix the problem once and for all.

I am told that it is not necessary to amend the Patents Act to make it clear that genes are not patentable, because as a matter of practice IP Australia no longer grants patents over human genes and has not done so for some time. But this is not true. I have in front of me a patent granted by IP Australia in the last three years over the gene CXADR, related to human colon cancer. As an aside I would like to point out that 90 per cent of patents granted by IP Australia are to foreign corporations, so knowledge about the human body, to which Australian scientists and researchers need access so that they can help find cures and treatments for disease and illnesses, knowledge that should be freely available to humankind because no-one invented it, is locked up and controlled in the main by foreign corporations.

With regard to the matter of diagnostic tests that contain no inventiveness or transformative steps but simply involve the mere comparison of genetic sequences, it is clear not just to me but to the Cancer Council of Australia and to the Royal College of Pathologists of Australasia, among others, that such tests should no longer be patentable.

The US federal court of appeal recently ruled—and this aspect of the ruling is not the subject of an appeal to the US Supreme Court—that Myriad's patent claims over a diagnostic test analysing whether a patient's genes had mutations that raised the risk of cancer were not patentable, because they involved only 'patent-ineligible abstract mental steps'. During that case the Association for Molecular Pathology noted:

That pathologists can be excluded from ‘looking at’ or ‘reading’ a patient’s DNA sequence to characterize or assess the risk for disease is akin to prohibiting a physician from taking a patient's pulse to see if his or her heart is beating.

…   …   …

… the fact that patients can be prevented from accessing the information contained in their DNA would offend most people’s conceptions of individual rights and personal liberty.

The fact that gene patents and diagnostic tests that involve the mere comparison of genetic sequences are not excluded as patentable subject matter constitute serious deficiencies in the raising the bar bill that I hope will soon be rectified by separate legislation.

Finally, I would like to pick up on a point made by Senator Nick Xenophon in his speech on the raising the bar bill regarding the need for a provision in the Patents Act that would enable Commonwealth or state governments, companies or individuals who are negatively impacted by a patent that is revoked to recoup the value of their patent monopoly or the damages caused by the patent monopoly. I note an example in this context: Sanofi-Aventis, the owner of a 20-year patent for clopidogrel valid until July 2003. It sought and obtained a second patent for clopidogrel valid until February 2013. This second patent had the effect of evergreening the first patent by extending patent protection over clopidogrel by nearly 10 years. GenRx sought to market a generic version of a drug containing clopidogrel once the first patent of Sanofi-Aventis had expired. Sanofi-Aventis obtained a interlocutory injunction; however, this was overturned by the full Federal Court, which revoked the second evergreen patent on the grounds that the earlier patent had already disclosed the relevant compounds. That is, the second version was not found to be an invention. The High Court refused Sanofi-Aventis's application for special leave to appeal. The cost to the PBS of the unmerited patent protection from July 2003 to 13 March 2010 is an estimated $476 million to $631 million. The estimated recoverable portion of this for the Commonwealth is $60 million, being for the period from September 2007 when the interlocutory injunction was granted to 13 March 2010 when the Federal Court revocation came into effect. This is based on an undertaking by Sanofi-Aventis at the time of being granted the injunction to pay compensation to any party adversely affected by the injunction.

I raise this case to express my general concern about the practice by pharmaceutical companies of evergreening drugs, that is, making very minor changes and getting extensions on their 20-year patents. This makes a mockery out of the patents system, which is supposed to be about offering a limited period of patent protection as a reward for invention that is disclosed to the public. It is not intended to provide a semipermanent monopoly that can milk the tax payer indefinitely. As can be seen from this example, and there are many others like it, the cost to the PBS from such practice is significant. The Australian economy is supposedly dedicated to the principle of competition. A notable exception to this principle is the patents system, which creates 20-year monopolies sanctioned by law as a way of encouraging inventive contributions. However, as we have seen, the vast majority of patents granted in Australia are to foreign corporations and it appears from the practice of evergreening pharmaceuticals, among other things, that a certain amount of gaming the system is taking place. IP Australia, which is self-funded through patent and trademark filing and renewal fees, has a role as facilitator for the industry but I am concerned that it is not able to effectively regulate the industry. I therefore support the notion of introducing provisions to deal with anti-avoidance and anti-competitive conduct so that, if corporations deliberately act in a way that stifles innovation or unfairly knocks out competition, there will be penalties attached to such conduct. Perhaps the ACCC would be best placed to investigate such behaviour.

I would like to finish by quoting from a dissenting statement made by economics professor DM Lamberton in a report by the Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia to the Hon. Barry Jones, then Minister for Science and Technology in 1984. Professor Lamberton noted:

No amount of talk about individual patent successes nor about a future in which the Australian economy has magically become progressive, innovation-oriented, and competitive on the world scene, can hide the facts that Australia exports little in the way of manufactured goods and has few inventions for sale. Most patents are granted to overseas firms.

He said the report:

… is constrained by the very of haze of assumptions about rights and rewards for inventors, special pleading by those directly involved, and a plethora of legal procedures and criteria in the Patents Act that it deplores. Many of its recommendations are for no change; and when change is implemented it is all too often merely procedural or has little prospect of being effective. A good opportunity to adjust an ancient institution to the current needs of the Australian economy has been missed.

Much of what Professor Lambert had to say then remains true today, as confirmed in the 2008 final report of the Cutler Review of the National Innovation System, which noted mounting evidence that the patent system is impeding rather than stimulating innovation. I would like to see the Productivity Commission take this issue up. While the raising the bar bill has some very good elements to it that I support, I believe that in a number of ways, some of which I have tried just now to describe, there is further work to do.