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Federal Law Review |
The competition principles set out in the Trade Practices Act 1974 (Cth) are based on an economic model of perfectly competitive markets responding to the market and producing only the goods and services required in the market.[1] However, effective competition together with good market information may create a disincentive to markets innovating (market failure) because new developments may be rapidly copied without the recovery of the innovation's development costs (a free ride).[2] According to this model, a patent under the Patents Act 1990 (Cth) compensates for the disincentive to innovate[3] and justifies a limited period of exclusive rights during which the innovator may exclude others in order to recover the development costs (confounding the free riders) and contribute to beneficial innovation by investing in new developments (with the added benefit of disclosure of the innovation).[4] Patents are therefore generally assumed to produce overall economic benefit while at the same time having minimal social costs.[5] The social costs are higher prices, restricted outputs, subsidised foreign inventors and the administrative costs of the patenting scheme.[6]
A patent in Australia provides rights for a period of up to 20 years from the date of lodging the claim,[7] including the 'exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention'[8] which is 'personal property ... capable of assignment and devolution by law'.[9] The term 'exploit', in relation to a product invention, includes 'make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of these things'.[10] In relation to a process invention, it includes 'use the method or process or do any act mentioned [for the product invention] in respect of a product resulting from such use'.[11] Thus, the patent effectively prevents others from commercially using, manufacturing and importing the patented product or process into Australia for the term of the patent.
While the market theory justifies some legislative control of the market, both the Patents Act 1990 (Cth) and the Trade Practices Act 1974 (Cth) recognise the potential detriment of patenting and limit the scope and exercise of a patentee's exclusive rights in an attempt to balance the tension between encouraging innovation and fettering competition (presumably for the overall benefit of consumers). For example, s 51 of the Trade Practices Act 1974 (Cth) provides that the exercise of patent rights should generally be limited by competition laws (in Part IV) except for some licensing and assignment conditions.[12] Section 144 of the Patents Act 1990 (Cth) limits the conditions that may be included in contracts for the sale, lease or license to exploit a patent and ss 128-132 of the Patents Act 1990 (Cth) provide remedies to unjustified threats of patent infringement proceedings.
As a generalisation, the pro-competition scheme set out in Part IV of the Trade Practices Act 1974 (Cth) allows any conduct except per se prohibitions, which apply to all conduct and require no evidence of damaging competition (such as price fixing,[13] boycotts,[14] exclusionary provisions,[15] third line forcing,[16] certain covenants in relation to price[17] and resale price maintenance),[18] and other limited prohibitions, which apply to conduct where there is evidence of damage to competition (such as conduct likely to substantially lessen competition through agreements between competitors,[19] exclusive dealings[20] and mergers,[21] and unlawful use of market power where a corporation with substantial market power eliminates or substantially damages a competitor,[22] prevents market entry,[23] deters or prevents competition).[24] The Trade Practices Act 1974 (Cth) also prohibits unconscionable conduct[25] which assists in minimising underhanded market practices, and deceptive and misleading conduct[26] which promotes accurate market information.
The Trade Practices Act 1974 (Cth) relies on the idea that 'competition is a process rather than a situation'[27] and so promotes 'deliberate and ruthless'[28] rivalry between competitors for the custom of consumers. The theoretical benefits of this competition process are to promote consumer access to goods and services and reduce prices so that scarce resources are most efficiently allocated. The Patents Act 1990 (Cth) limits this competitive process by granting exclusivity to innovative ideas subject only to the minimum legislated requirements for patentability. These minimum requirements seek to limit the detrimental anti-competitive effects of patenting by allowing only innovations that are likely to be of overall benefit to the economy, so justifying the limited protection from competition.
Section 18 of the Patents Act 1990 (Cth) essentially requires that for the grant of a patent the subject matter must be an invention (a manner of new manufacture) which is new, not obvious, novel and useful. Section 18 provides, in part:
(1) [A] patentable invention is an invention that, so far as claimed in any claim:
(a) is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies; and
(b) when compared with the prior art base as it existed before the priority date of that claim:
(i) is novel; and
(ii) involves an inventive step; and
(c) is useful;
These requirements are not discrete tests and have different degrees of importance at different stages of the patenting process (for example, at the stage of application and opposition). The Patent Office determines whether the patent application meets the statutory criteria for patentability subject to various challenges set out in the legislation. It is significant that the Patent Office, until the recent amendment of the Patents Act 1990 (Cth),[29] could only reject a patent when 'it is practically certain that the letters patent granted on the specification would be held invalid'[30] and where the validity of a patent was uncertain the patent was granted.[31]
Both the Patents Act 1990 (Cth) and the Trade Practices Act 1974 (Cth) have built in measures to allow some flexibility in their application. The prohibited conduct under the Trade Practices Act 1974 (Cth) is subject to authorisation under Part VII, except for corporations with market power misusing that power.[32] The authorisation requires a broad assessment of public interest encompassing allocation efficiency, production efficiency and dynamic efficiency, all with a social perspective[33] and a substantiated public benefit.[34] The authorisation process recognises that in some circumstances special exemption from competition may be justified in the public interest. Conversely, the patent laws have been drafted to include a 'public policy' exception recognising that in some instances the social costs of patents are not minimal and in these circumstances a patent should not be granted. This public policy exception is based on patent abuses in the past and our general dislike for monopolies,[35] and finds expression by way of reference to s 6 of the Statute of Monopolies in the legislated requirements for patentability,[36] that the declarations of invalid patent 'monopolies' contained in the preceding provisions of the Statute of Monopolies:
[S]hall not extend to any letters patent and grants of privilege ... hereafter to be made of the sole working or making of any manner of new manufacture within this realm, to the true and first inventor and inventors of such manufactures, which others at the time of making such letters patent and grants shall not use, so as also they be not contrary to the law or mischievous to the state by raising prices of commodities at home, or hurt trade, or generally inconvenient.[37]
The potential for gene and gene sequence patents to be anti-competitive is a real concern. Global biotechnology is dominated by a small number of large predominantly pharmaceutical and agricultural corporations relying on patented products and processes. Among these corporations there is the potential for strategically accumulating key technology in the form of patents over finite genetic materials and their applications with significant potential for anti-competitive conduct. An analysis of gene and gene sequence patenting in Australia has illustrated the potential for very broad claims to both sequences[38] and sequence applications[39] to effectively confound competitors using the basic patented genetic materials at all or inventing around the patents.[40] The decisions about erythropoietin,[41] Taq DNA polymerase[42] and serotonin receptors[43] illustrate how multiple claims may apply to a basic sequence 'invention', and that in each case there is a very limited scope for substitution or imitation, or even further innovation.[44] This brings the effectiveness of competition law into focus and poses the question whether Australian patent and competition law will be effective in delivering to the Australian economy reasonably priced access to, and use of, the basic patented genetic materials, on which a competitive domestic pharmaceutical and agricultural industry, and further economically useful innovations depend.
This article examines the competition schemes proposed by the Patents Act 1990 (Cth) as they apply to broad gene and gene sequence patents and finds the Patent Office and the courts are reading down the pro-competition principles enshrined in the Patents Act 1990 (Cth). An examination of the co-existing competition scheme in the Trade Practices Act 1974 (Cth) finds a failure to apply the Patents Act 1990 (Cth) scheme is unlikely to be ameliorated as it is the breadth of the patent that effectively delimits the boundary of the patentee's exclusion from competition. The consequences of a failure to apply the threshold patenting and other pro-competition measures in the Patents Act 1990 (Cth), and the likely inability of the Trade Practices Act 1974 (Cth) to limit anti-competitive conduct by (broad) patent holders, is more restricted access to, and higher prices for, patented products and processes in Australia.
This article is structured as follows:
The Patents Act 1990 (Cth) in Australia recognises that an element of the patent scheme is that an 'invention' should be a 'manner of new manufacture the subject of letters patent and grant of privilege within s 6 of the Statute of Monopolies and includes an alleged invention',[45] and 'so far as claimed in any claim ... is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies'.[46] These separate tests apply threshold requirements of inherently patentable subject matter, newness (or inventiveness) and the proviso exceptions (or public policy). These requirements operate with the other legislated elements of novelty and inventive step to exclude subject matter which is not 'a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour'.[47] In competition terms, these threshold requirements limit a patentee's exclusive rights to only those inventions likely to benefit the economy. However, the Patent Office and the courts are increasingly setting a very low standard for these legislated requirements, or are failing to apply them at all.
The classic statement of what constitutes inherently patentable subject matter was made by the High Court majority in NRDC v Commissioner of Patents:
The word 'manufacture' finds a place in the present Act, not as a word intended to reduce the question of patentability to a question of verbal interpretation, but simply as the general title found in the Statute of Monopolies for the whole category under which all grants of patents which may be made in accordance with the developed principles of patent law are to be subsumed. It is therefore a mistake, and a mistake likely to lead to an incorrect conclusion, to treat the question whether a given process or product is within the definition as if that question could be restated in the form: 'Is this a manner (or kind) of manufacture?' It is a mistake which tends to limit one's thinking by reference to the idea of making tangible goods by hand or by machine, because 'manufacture' as a word of everyday speech generally conveys that idea. The right question is: 'Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?[48]
Thus, the requirement of a 'manner of manufacture within s 6 of the Statute of Monopolies' includes the body of law which has evolved through the use of this term in the common law and previous legislation (for example, the Patents, Designs and Trademarks Act 1883 (Imp), the Patents Act 1903 (Cth) and the Patents Act 1952 (Cth)) and the flexibility of judicial interpretations in the English[49] and Australian cases, rather than a strict application of the words.[50] The decided cases on 'manner of manufacture within s 6 of the Statute of Monopolies' had evolved to exclude a range of subject matter from suitability for patenting. These subject matters may be classed as subject matter concerning the living,[51] the pre-existing,[52] the aesthetic[53] and the abstract.[54] However, modern decisions of the courts have increasingly reduced the classes of excluded subject matter so that the acceptable subject matter of an invention is now 'of such a wide, elastic and amorphous character as to cover almost all newly-created subject matters or processes'.[55] For example, the excluded subject matter no longer includes living organisms,[56] agricultural and horticultural processes,[57] products of nature[58] or methods of human treatment,[59] and it is arguable that there is no longer any subject matter that is unpatentable.[60]
Certainly these decisions and the test set out in the NRDC case remove most restrictions on the subject matter of biotechnology as reflected in the Patent Office practice of accepting as patentable subject matter inventions involving non-human organisms, plants, bacteria, fungi, algae, viruses, nucleic acids, amino acids, cell organelles, enzymes, and so on.[61] Further, despite the legislated restriction on patenting '[h]uman beings, and the biological processes for their generation',[62] the Patent Office will accept applications for patents for human biotechnology products which have been separated from the human body and manufactured synthetically for re-introduction into the human body for therapeutic purposes, including gene and gene sequences.[63]
Presumably the Parliament considered in selecting the words 'manner of new manufacture' to define an 'invention' there was an element of 'newness' and 'inventiveness' which was not addressed by the concepts of novelty and inventive step and which required a separate assessment. In N V Philips Gloeilampenfabrieken and Philips Lighting Pty Ltd v Mirabella International Pty Ltd[64] the High Court split three to two on the significance of the word 'new' in favour of recognising that '[i]f it is apparent on the face of the specification that the quality of inventiveness necessary for there to be a proper subject of letters patent under the Statute of Monopolies is absent, one need go no further'.[65] This decision was significant because it required the court to determine what was, in its view, adequate to satisfy a threshold requirement of 'newness' or 'inventiveness' for a 'patentable invention' before making a further assessment of the other requirements of novelty and inventive step.
More recently the majority of the High Court in Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd,[66] while deciding the case on grounds specific to revocation in the Patents Act 1952 (Cth), expressly rejected the notion that 'invention' had any element of novelty or inventive step. The majority judges considered the Full Federal Court's use of the words 'inventive step' and 'inventive merit' in assessing 'invention' in this case was an error as this was in effect a consideration of novelty or inventive step which were independent inquires.[67] The majority therefore applied a very narrow interpretation to the threshold element of 'newness' or 'inventiveness' and excluded completely any element of novelty or inventive step. Kirby J, in dissent, considered the majority had applied an overly narrow reading of the majority view in Mirabella.[68] He opined that the use of terms such as 'inventive merit' by the Full Federal Court was unfortunate, but that the Court did not have lack of novelty or obviousness in mind when applying the threshold test of 'newness', and was not referring to those grounds in its reasoning.[69] This view suggests Kirby J was not in disagreement with the majority, but rather with the interpretation of the emphasis used by the Full Federal Court in defining the concepts.
This threshold requirement was again considered in detail by the Full Federal Court in Bristol-Myers Squibb Company v FH Faulding Pty Ltd.[70] The judge at first instance found the claimed invention failed the threshold requirement of 'newness' or 'inventiveness' (and also the subsequent requirement of inventive step). On appeal the Full Federal Court found Mirabella to be binding and noted that the majority judgment in that case affirmed the distinction drawn by the Full Federal Court between inventiveness sufficient to characterise the subject matter as a manner of new manufacture and inventive step in s 18(1)(b)(ii).[71] However, in drawing this distinction Black CJ and Lehane J considered that 'it is not easy to envisage circumstances in which a claimed invention may lack the threshold requirement of inventiveness, but yet involve (for the purposes of s 18(1)(b)(ii)) an inventive step',[72] and warned that a court should be slow as a body of 'untutored understanding' to assume a technical expertise in making a negative assessment of 'newness' or 'inventiveness'.[73] It is significant that Black CJ and Lehane J point out that Mirabella may have been in effect an anomaly, as obviousness was not pressed in that case,[74] and suggest that only rarely would 'newness' or 'inventiveness' confound a claim.[75]
The minority view in Mirabella noted s 18 of the Patents Act 1990 (Cth) did not define 'invention', but rather specified what was necessary for a patentable invention. The minority judges accepted that s 18 reflected the draftsman's specific use of the term 'new' in the Statute of Monopolies 'manner of new manufacture' and incorporated the additional requirements in s 18(1)(b)(i) and (ii). They described a 'patentable invention' by requiring a manner of manufacture to show qualities of novelty and inventiveness when compared to the prior art base:
[A] patentable invention is a manner of manufacture (s 18(1)(a)) which is, amongst other things, new in the sense that, when compared to the prior art base, it is novel and involves an inventive step (s 18(1)(b)(i) and (ii)).[76]
This analysis, the minority concluded, was necessary to reflect the particular elements covered by s 18(1)(b) and the comparisons required by s 7 of the Patents Act 1990 (Cth), otherwise these matters would be avoided.[77] It now seems the reading down of any threshold requirement of 'newness' or 'inventiveness' by the High Court and Full Federal Court in practical effect brings the majority view in Mirabella into line with the minority, and ensures that the comparisons required by s 7 are effective.
A further issue relevant to the assessment of the threshold requirement of 'newness' or 'inventiveness' is what materials and information may be considered in making the assessment. The broader the range of materials and information the more likely the threshold requirement will fail and the more likely a patent will only be granted for something which really is new. The majority in Mirabella considered that the determination could only be made in light of 'the specification, when properly construed and understood', which arguably allows an inquiry well beyond the construction of the specification.[78] In Advanced Building Systems, Kirby J, considered this inquiry, included prior publications.[79] In the Federal Court, Dowsett J in Dyno Nobel Asia Pacific Ltd v Orica Australia Pty Ltd[80] pointed to the state of knowledge in the industry, the way in which the patentee had conducted the case and to the reference in Commissioner of Patents v Microcell Ltd[81] to the 'surrounding scientific facts which would be known to every person skilled in the particular art so far as these are established in evidence or are admitted in argument'.[82] Dowsett J was presented with substantial evidence including evidence of the prior art base (novelty and inventive step, s 18(1)(b)) and concluded, '[i]f ... one focuses on the correct question [that is, 'newness' or 'inventiveness' to the exclusion of novelty and inventive step], the meaning of the specification, and considers only material relevant to that issue, one will not trespass upon the proper area of operation of s 18(1)(b)'.[83]
Then in the Full Federal Court in Bristol-Myers Squibb, Black CJ and Lehane J said:
[O]n the basis of what was known, as revealed on the face of the specification, the invention claimed was obvious or did not involve an inventive step—that is, would be obvious to the hypothetical non-inventive and unimaginative skilled worker in the field ...—then the threshold requirement of inventiveness is not met. Some elaboration, however, is required in relation to what the specification reveals as "know". If a patent application, lodged in Australia, refers to information derived from a number of prior publications referred to in the specification or, generally, to matters which are known, in our view the Court—or the Commissioner—would ordinarily proceed upon the basis that the knowledge thus described is, in the language of s 7(2) of the 1990 Act, part of "the common general knowledge as it existed in the patent area". In other words, what is disclosed in such terms may be taken as an admission to that effect'.[84]
For gene and gene sequences this qualification of 'newness' and 'inventiveness' may be significant as genetic materials may be different, in that the molecular structure of associated and related DNA, mRNA and polypeptides may differ while retaining the same (or a very similar) function.[85] For example, a single base change in the DNA for haemoglobin is associated with sickle cell anaemia while other conservative base changes have no observable effect on 'normal' haemoglobin function. Does this single base change, with its dramatic effect, make the gene associated with sickle cell anaemia different from the gene associated with 'normal' haemoglobin? How different the gene or gene sequences need to be for there to be a new invention could be an issue as non-inventive skilled experts are likely to have differing views and the differences are very likely to be revealed on the face of the specification. However, the courts' approach to date suggests the situation would be resolved by deferring this question to be considered as elements of novelty and inventive step. In this situation the court would avoid the issue entirely, unless the special circumstances of Mirabella arise—where novelty and inventive step was expressly not in issue. If this is correct, the threshold requirement for 'newness' or 'inventiveness' will have a very, very limited operation.
In applying the proviso requirement in the Patents Act 1990 (Cth), it is a question of whether the previously determined 'manner of new manufacture' is excluded from patentability because it falls within the proviso set out in s 6 of the Statute of Monopolies that it 'be not contrary to the law or mischievous to the state by raising prices of commodities at home, or hurt trade, or generally inconvenient'.[86] Unfortunately the Patent Office does not make this assessment and the courts have generally ignored the issue or declined to consider the matter preferring guidance from Parliament. For example, Finkelstein J in Bristol-Myers Squibb[87] when considering whether medical treatments were excluded from patentability by the proviso considered 'generally inconvenient' more relevant than 'contrary to law' or 'mischievous to the state by raising the price of commodities'. His Honour then reviewed the various competing contentions about the benefits and detriments of medical treatment patenting:
It is likely that few of the arguments admit a definitive answer. The area of controversy is great. Public interest groups, medical and professional associations, medical scientists and the pharmaceutical industry, among others, would need to be approached and their views ascertained before a court could ever hope to arrive at a reasoned conclusion, if it could ever do so. Indeed a court might well be asked to take account of ethical and moral considerations to arrive at a decision. This is not a function of a court on an issue such as this. In my opinion, medical treatment and surgical processes are patentable under the legislation and, if public policy requires a different result, it is for the Parliament to amend the 1990 Act'.[88]
Black CJ and Lehane J considered that the 'insurmountable problem' was logically to distinguish between allowing a patentable product for treating humans while disallowing patentability for a method of treatment.[89]
For medical treatment patenting, the majority view in the Federal Court is presently that the proviso 'generally inconvenient' is not relevant or does not apply.[90] Although this might not be characterised as a failure to consider the proviso, the effect is to expand further the scope of patentable subject matter and read down the limiting criteria in the Patents Act 1990 (Cth). It is not presently clear whether this same view applies generally to the other elements of the proviso and that the courts might be said to have read down this requirement entirely. However, for gene and gene sequences per se, if there is any doubt as to their patentability, there seems to be little doubt that the issue will be left for Parliament to decide. This view is supported by the Full Federal Court in Bristol-Myers Squibb which viewed Patent Office practices at the passing of the Patents Act 1990 (Cth) as an indication that there was no intention to exclude human treatment innovations as patentable subject matter. On this basis, the Court left the matter for Parliament to decide if it had a different view from the Court.[91] Adopting this approach, the express rejection of proposed amendments to the 1990 Act to exclude gene and gene sequences by the Parliament[92] would seem to be decisive proof that the Parliament had considered gene and gene sequence patentability and accepted they were patentable subject matter.
Novelty and inventive step are requirements of s 18(1)(b) of the Patent Act 1990 (Cth) and are measured against the 'prior art base' which existed before the priority date. The term 'prior art base' is defined in the Schedule 1 Dictionary and applied through s 7 to cover a document (domestically and internationally) or the doing of an act (domestically) which discloses prior publication or prior use.[93] Involved in these concepts are 'a person skilled in the relevant art' and 'prior art information' which are attempts to further confine patents to only those 'inventions' which really are innovative and likely to result in some benefit to the economy. The novelty test is described as the reverse infringement test: 'The basic test for anticipation or want of novelty is the same as that for prior infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement'.[94] The inventive step test is whether, having regard to what was known (internationally) or used in Australia before the priority date, was the claim obvious to a non-inventive skilled worker in the field, equipped with the common general knowledge in that particular field of endeavour at the priority date.[95] In both instances all that is required is a scintilla of innovation.[96]
A previous analysis of Patent Office decisions has demonstrated the ease with which a claimed gene and gene sequences may satisfy the requirements of novelty and inventive step.[97] While 'a scintilla of inventiveness' may be all that is necessary, there must actually be some inventiveness.[98] Unfortunately, in practice, this becomes an individual assessment of the facts in the particular matter.[99] In the past, this assessment was initially made by the Patent Office subject to the restraint that a patent may only be rejected when 'it is practically certain that the letters patent granted on the specification would be held invalid'[100] and where the validity of a patent is uncertain the patent should be granted.[101] The courts then often fail to remedy this situation. For example, in Kirin-Amgen Inc v Board of Regents of the University of Washington and Genetics Institute Inc[102] the parties challenging a patent claim to the same sequence failed to raise inventive step and novelty and the Deputy Commissioner commented: 'The prime question in this opposition is whether the invention claimed is obvious, although it was not a ground of opposition argued by ... [the opponent]'.[103] Despite this comment this ground was not raised in the Federal Court appeal.[104] The reasons for this failure are not clear, although it is open to speculation that both parties had considerable interest in maintaining their existing patent portfolios and would not want a precedent establishing that a DNA sequence derived from a protein with a known function was neither novel nor obvious. Such a finding would have undermined the value of most gene and gene sequence patents in Australia.
The reviews on the novelty and inventive step elements have recommended that Australia adopt the test of prior art base adopted in the United States and Europe.[105] The current prior art base is confined to the common general knowledge of a person skilled in the art in Australia plus one additional document which that skilled person could be expected to find, understand and consider relevant.[106] These reviews recommended expanding the prior art base definition, including acts and common general knowledge, anywhere in the world which a person skilled in the art could have been reasonably expected to find, understand and regard as relevant.[107] The government announced it would amend the Patents Act 1990 (Cth) 'strengthening the examination of patent novelty and inventive step so that these criteria for patentability are more closely aligned with international standards'.[108] The Patents Amendment Act 2001 (Cth) now expands the 'patent area' so that the prior art base is not confined to common general knowledge and information made available through doing an act in Australia, and also allows for different pieces of information to be combined in order to assess the prior art base.[109] These amendments bring Australian law into line with the United States and Europe, and might be expected to limit future gene and gene sequence claims through the publication of sequence data and the techniques used to identify, isolate and use sequences.
Significantly, the Patents Amendment Act 2001 (Cth) proposes a 'balance of probabilities' test for the novelty and inventive step requirements rather than giving the applicant the benefit of any doubt.[110] While this measure promises to raise the threshold, the practice is unlikely to effect the low threshold of non-obviousness findings of 'fact' by the Patent Office. For example, in Tekada Chemical Industries v Hoffman-La Roche Aktiengesellschaft[111] a Patent Office delegate found that '[s]ince the opponent has not established that the skilled worker would have selected particular techniques from the myriad available to them, I am not convinced that the skilled worker could have successfully purified recombinant non-glycosylated human interleukin-2 without an inventive step'.[112] This finding even rejected the patentee's claim (defending the patent) that only one step in the sequences of 'well known and characterised processes' was essential. It also rejected evidence from the opponent about the range of well known techniques available to skilled workers, including the purification of compounds very similar to the subject of the opposition. Applying a 'balance of probabilities' test to novelty and inventive step would not have changed this outcome.
Sections 144-146 of the Patents Act 1990 (Cth) reproduce in part s 112 of the Patents Act 1952 (Cth), which in turn reproduced s 38 of the Patents and Designs Act 1907 (Imp). These provisions make void a condition in a contract 'relating to the sale or lease of, or a license to exploit, a patented invention' which prohibits or restricts the buyer, lessee or licensee using or acquiring a product or process (whether patented or not), although subject to some exceptions, and allows a patent lease or license contract to be terminated by either party after the patent has ceased to be in force with three month's notice.
The provisions were intended to deal with the limited abuses where a patentee seeks a collateral advantage to the patent by restricting trade with others.[113] Sections 144-146, and their predecessors, have been very narrowly interpreted by the courts giving them little practical effect.[114] For example, the majority of the High Court in Transfield Pty Ltd v Arlo International Ltd[115] was able to find a contractual clause that provided that 'during the period of the ... [license] ... at all times to use its best endeavours in and towards the design fabrication and installation and selling of the Arlo PTL [electricity] pole throughout the licensed territory and to energetically promote and develop the greatest possible market for the Arlo PTL pole' was not voided by s 112 because the condition was not an absolute prohibition on using or selling other poles.[116] This was a surprisingly narrow interpretation of this provision as there was, in the circumstances of this case, a practical prohibition because there would have been only one opportunity to make a tender for any project.[117]
The drafting of the Patents Act 1990 (Cth) failed to address the 'courts' narrow interpretation or, in any way, to improve the function of these provisions even though the Industrial Property Advisory Committee[118] had recommended repealing s 112 (the equivalent in almost identical words of ss 144-146) and leaving the limitations imposed on licenses and assignments to be dealt with according to the Trade Practices Act 1974 (Cth). The Intellectual Property and Competition Review Committee has now made a similar recommendation.[119]
Compulsory licensing and forfeiture were intended to address a concern that foreign patent owners might limit domestic prosperity by hindering domestic manufacture and industry development while at the same time extracting monopoly profits.[120] Promoting domestic industry and development may no longer be imperatives,[121] but compulsory licensing and forfeiture provide potentially useful tools to implement competition objectives where the patentee seeks to impose high prices and restrict access. Section 133 of the Patents Act 1990 (Cth) provides a 'person' may apply for a compulsory license to be made by a 'prescribed court'[122] three years after the grant of a patent[123] where 'the reasonable requirements of the public with respect to the patented invention have not been satisfied' and 'the patentee has given no satisfactory reason for failing to exploit the patent'. Where a compulsory license has been granted s 134 provides 'an interested person' may apply to have the patent forfeited for the same reasons. Section 135 defines the 'reasonable requirements of the public' to be unfair prejudice to an existing or potential Australian industry or demand for the patented product or process has not been met in Australia, that trade or industry in Australia is unfairly prejudiced by conditions attached by the patentee or that the patent is not being commercially worked in Australia.
Menzies J of the High Court in Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation[124] considered a similar provision to the current s 135 of the Patents Act 1990 (Cth) in s 110 of the Patents Act 1952 (Cth) and stated that:
[T]he demand for the patented article has not been reasonably met if the court should be satisfied that, because of its superiority over articles already on the market, potential purchasers would have bought it had it been available. A market for a less efficient article indicates, other things being equal, a market for a more efficient article.[125]
In that case, the petitioner imported the patented improved captive bolt tool whereupon the patentee requested the petitioner cease and account for the tools already sold. The petitioner attempted to enter a licensing agreement but was refused as an exclusive licensing arrangement already existed and the licensee would not sub-license. At the time of the petition, the tool was not available to the public in Australia even though it was being manufactured overseas. Menzies J considered this was evidence that the reasonable requirements of the public had not been satisfied at the date of the petition.[126] However, at the hearing there was evidence that the exclusive licensee in Australia had good reasons for failing to supply the tool to the public. Further, he had acted reasonably in attempting to develop a tool to be profitably manufactured in Australia and that this was not a belated response to the petition.[127] Menzies J also considered the petitioner would be an unsuitable company to work the invention in Australia.[128] The application to grant a compulsory license was therefore refused.[129]
The present s 135 is constructed more broadly that s 110 of the 1952 Act and might be interpreted differently, with a focus on competition principles. In these circumstances the term 'trade' might be expected to have a very broad meaning and include every commercial or business transaction as well as non-arm's length dealings outside the main stream of ordinary commercial activities and without a dominant purpose of profit making.[130] The terms 'unfairly prejudiced', 'reasonable terms' and 'reasonable extent' require an interpretation that should also promote competition principles. However, despite the apparently broad application of these provisions, and in particular the definition of the 'reasonable requirements of the public', they have not been relied on to any extent in Australia.[131] This might be because they are either (a) too restrictive—too difficult to prove, hedged with qualifications and discretion and too expensive to seek, or (b) very effective—inducing patentees to license in fear of a compulsory license and forfeiture.[132]
In reviewing the patent system in 1984, the Industrial Property Advisory Committee recommended additional discretionary powers for courts to order compulsory licenses as a competition law remedy where the patent related conduct breached Part IV of the Trade Practices Act 1974 (Cth).[133] This recommendation extended to including the transfer of know-how together with the patent as a reasonable license term, and that such licenses should allow importation of the patented product or process.[134] The recent Intellectual Property and Competition Review Committee recommended replacing s 135 with a series of conditions that if satisfied would require the order of a compulsory license.[135] These conditions include that access to the patented invention is required for competition in a relevant market, that there is a public interest in enhanced competition, that the reasonable requirements for access have not been met and that the order would not compromise the legitimate interests of the patent owner.[136] In applying these conditions the Australian Competition Tribunal was cited for its expertise in applying Part IIIA of the Trade Practices Act 1974 (Cth) and perhaps suggesting the principles applied in Part IIIA might be relevant in assessing the need for a compulsory license.[137] There was no other indication of how the broad terms of the conditions might be interpreted, although the Intellectual Property and Competition Review Committee did consider the requirement for competition in a relevant market would mean there was no other option for competition in that market.[138]
Compulsory licenses are potentially the most convenient and effective way to deal with the failings in applying the existing competition elements of the Patents Act 1990 (Cth). Article 31 of the Agreement on Trade Related Aspects of Intellectual Property Rights[139] (TRIPs) makes express provision for compulsory licensing (or rather, 'other use without authorisation of the right holder') as forming part of the minimum standard patent legislation for World Trade Organisation member states. The pre-conditions specified by TRIPs for the grant of a compulsory license are onerous and only follow the failure of the patentee to authorise use on reasonable terms and conditions within a reasonable time (except in national emergencies). There is also express recognition that compulsory licenses are a remedy in any judicial assessment of anti-competitive conduct, and it seems likely this provision would extend to include a suitable remedy following a finding of conduct in breach of the Trade Practices Act 1974 (Cth). However, there are substantial difficulties in assessing a reasonable royalty and exactly what circumstances merit a compulsory license. Finkelstein J's assessment that a compulsory license was 'cumbersome and expensive to apply'[140] identifies what is probably its biggest disadvantage as a remedy for an anti-competitive patent. Further, the terms and royalty to be paid for the compulsory license should not be under estimated because of the potential for trade sanctions and retaliation according to the dispute settlement procedures forming part of TRIPs.
Perhaps a more fruitful area to consider is the exceptions detailed in Arts 7, 8, 30 and 40 which expressly recognise that domestic laws may deal with promoting innovation, technology transfer, remedy anti-competitive practices and regulate intellectual property which adversely affects trade or impedes technology transfer. Further, the recent decision by the World Trade Organisation in Canada—Patent Protection of Pharmaceutical Products[141] established the potential of domestic patent laws to implement measures to resolve the potentially damaging effects of patenting and promote competition.[142]
The Trade Practices Act 1974 (Cth) may be modelled on perfect competition, but it is workable or effective competition that the Act seeks to achieve in its application.[143] This is determined by the courts and tribunals dealing with the market conditions in each case and evaluating the conduct in question. Significantly, the legislative scheme does not apply to monopoly or oligopoly market structures, except acquisitions that would result in substantially lessened competition.[144]
In assessing a patentee's conduct, there is a conflict between laws aimed at promoting competition and patents that provide guarantees against competition, even though both schemes set out to promote consumer benefit and competition through innovation. The Trade Practices Act 1974 (Cth) provides a very limited exemption for certain conditions in licenses and assignments that are considered to be generally pro-competitive,[145] and theoretically applying the legislative scheme to all other conduct.[146] So, s 51(1) of the Trade Practices Act 1974 (Cth) provides that 'in deciding whether a person has contravened this Part [IV], the following must be disregarded: (a) anything specified in, and specifically authorised by: (i) an Act (not including an Act relating to patents)'. The only patent related exceptions to this are set out in s 51(3) which provides 'the imposing of, or giving effect to, a condition' of a patent license or assignment 'to the extent the condition relates to: (iii) the invention to which the patent or application for a patent relates or articles made by the use of that invention' are exempt from the Trade Practices Act 1974 (Cth), except in relation to unlawful use of market power[147] and resale price maintenance.[148]
A literal interpretation of s 51(1) suggests that the patentee's conduct must comply with the Trade Practices Act 1974 (Cth) subject only to the s 51(3) exceptions (which apply only to Part IV conduct). Conversely though, the construction of s 51(1) does not exclude a recognition of the patentee's rights embodied in the Patents Act 1990 (Cth) in applying the Trade Practices Act 1974 (Cth) provisions.[149] Thus the boundaries between the lawful exercise of a patent right under the Patents Act 1990 (Cth) and an unlawful anti-competitive practice proscribed by the Trade Practices Act 1974 (Cth) are not entirely clear. As one commentator observed:
[T]here is no ‘objective truth’ to be found in the tension and conflict between intellectual property and antitrust. While many legal scholars have sought to find a 'unified field theory' which will serve as a legal tool to resolve all such conflicts, no one has yet succeeded. It is probably delusive to even search for such a thing ... I think that all that is at work is the personal preference as to societal and economic values of the judges who decide the cases.[150]
The major interaction between patents and competition law undoubtedly occurs in the licensing and assignment of patents, although there is considerable scope for exercising a patentee's exclusive rights contrary to the Trade Practices Act 1974 (Cth) that are not conditions of a license or assignment.[151] The following discussion examines the balance the courts are likely to adopted in Australia in characterising the interface between the patents and competition law schemes concentrating on licenses and assignments. The three areas of characterising the intellectual property right, s 51(3) license and assignment condition exemptions and an aspect of the s 46 unlawful use of market power provision are examined. This analysis is not intended to be an exhaustive review of patent license and assignment practices, but rather an illustration of how the purpose and scope of the exclusive rights granted by the patent are likely to be recognised ahead of the proscriptions in the Trade Practices Act 1974 (Cth), and that the boundaries at the interface between patents and competition law schemes are effectively set by the breadth of the patent claim. For broad sequence and sequence application claims this promises to be considerable exemption from competition laws.
Some early authority supported the contention that relying on a statutory intellectual property right took the conduct outside the bounds of the Trade Practices Act 1974 (Cth).[152] More recently, the approach of the courts in dealing with conduct based on a statutory intellectual property right has been to characterise the disputed conduct so that there is no need to adjudicate the likely conflict between an intellectual property right and the Trade Practices Act 1974 (Cth), while recognising that in some circumstances the exclusive intellectual property rights may be subject to the Trade Practices Act 1974 (Cth).[153] For example, in APRA Ltd v Ceridale Pty Ltd[154] a copyright owner of most public performance music was in dispute with a hotel owner for money owed from fees for expired licenses and further licenses were required to perform the copyright music in public. The Full Federal Court rejected the characterisation of the claim by the Australasian Performing Right Association (APRA) as 'nothing more than a debt collecting exercise' and found APRA was merely exercising its right to restrain a breach of its copyright without first obtaining a license. There was evidence that APRA's requirement for a license application to be completed had not been properly satisfied and that APRA did not decline at any time to issue the licenses only because of the failure to pay the arrears. This was fortunate for APRA as earlier correspondence had stated:
Further, we are instructed by our client [APRA] that if proceedings are instituted under the Copyright Act no subsequent application by you for the grant of a license will be considered nor a license granted unless and until all our client's costs (being our client's party and party costs and including its solicitor and own client costs) incurred in anticipation of, preparatory to and in relation to the said proceedings are paid by you.[155]
The Court accepted that APRA had market power as the only supplier of the copyright music and was legitimately exercising its copyright rights to ensure only those properly licensed could use the copyright works—APRA 'was ready to grant new licenses, without any pre-condition about arrears or costs, if proper applications were lodged'.[156] Thus APRA was exercising the rights of its copyright and was not using its power for a prescribed purpose. However, the Court warned that the holders of intellectual property with market power were in a difficult position to avoid misusing that power in disputes, and had APRA's threat to recover costs before issuing a license been acted upon, then the conduct may have been unlawful as a misuse of market power for the purposes of the Trade Practices Act 1974 (Cth).[157]
Cases like APRA Ltd v Ceridale Pty Ltd may also be characterised as recognising the patentee's statutory exclusive rights, but prohibiting conduct proscribed by the Trade Practices Act 1974 (Cth) only where the exercise of that right can be said to be beyond the purpose and scope of the exclusive rights granted by the patent. So, in APRA's case, using a patent to enforce recovery of a debt would most probably have been characterised as outside the purpose and scope of the rights conferred by the patent, and given APRA's market power, may well have been an unlawful use of market power.
This characterisation has been recognised in European Community law, which applies competition law to the 'exercise' of an intellectual property right but not the 'existence' of the right,[158] such that exercising a right within the specific subject matter of the intellectual property right (the 'essential function' of the invention or application)[159] relates to the existence of the right and is outside the ambit of competition law irrespective of the market conditions.[160] Thus in AB Volvo v Erik Veng (UK ) Ltd,[161] a refusal to license a product incorporating a protected design could not be an unlawful use of market power because the rights holder was merely exercising the existence of his exclusive rights.[162]
More recently, this characterisation may have been upset by recognising that in some (special) circumstances the 'existence' of an intellectual property right can breach competition laws. In Radio Telefis Eireann and Independent Television Publications Ltd v EC Commission[163] the European Court of Justice held a refusal to license copyrighted television listings to an independent publisher of a comprehensive viewing guide was an unlawful use of a dominant market position (equivalent to s 46 of the Trade Practices Act 1974 (Cth)).[164] This decision found the conduct was anti-competitive in a derivative market and was therefore unlawful even though the copyright owner was maintaining the exclusivity of its exclusive rights which was the very 'existence' of its intellectual property right. An alternative characterisation of Radio Telefis that the court considered the conduct extended beyond the intended reach of the copyright and was therefore beyond the purpose and scope of the exclusive rights. If this characterisation is correct then the paramountcy of the 'core' intellectual property rights are maintained as outside the ambit of competition law.
The theoretical approach in the United States may be different while the actual approach appears to conform to the European model. The United States Department of Justice and the Federal Trade Commission guidelines on licensing intellectual property state:
Intellectual property law bestows on the owners of intellectual property certain rights to exclude others. These rights help the owners to profit from the use of their property. An intellectual property owner's rights to exclude are similar to the rights enjoyed by owners of other forms of private property. As with other forms of private property, certain types of conduct with respect to intellectual property may have anti-competitive effects against which the antitrust laws can and do protect. Intellectual property is thus neither particularly free from scrutiny under the antitrust laws, nor particularly suspect under them.[165]
Applying these principles the United States courts have sometimes hesitated, but they have never actually found a refusal to sell or license an intellectual property right as being anti-competitive,[166] and may now actually consider intellectual property rights are beyond the reach of competition laws. Thus in Independent Service Organizations Antitrust Litigation the Federal Circuit opined:
In the absence of any illegal tying, fraud in the Patent and Trademark Office, or sham litigation, the patent holder may enforce the statutory right to exclude others from making, using or selling the claimed invention free from liability under the antitrust laws. We therefore will not inquire into his subjective motivation for exerting his statutory rights, even though his refusal to sell or license his patent invention may have an anti-competitive effect, so long as that anti-competitive effect is not illegally extended beyond the statutory patent grant.[167]
This opinion has now been cited as authority '[b]ecause a patent owner has the legal right to refuse to license his or her patent on any terms, the existence of a predicate condition to a license agreement cannot violate the antitrust laws'.[168] In contrast, recent merger decisions demonstrate that the Federal Trade Commission accepts that in some cases potential conduct relating to the purpose and scope of the exclusive rights can be anti-competitive. For example, in the Ciba-Geigy Limited and Sandoz Limited merger, the Commission required the merged entity to issue non-exclusive licenses for its gene therapy technology (which included the gene sequences).[169] In the Glaxo PLC and Wellcome Limited merger, the Commission required the divestiture of patents and technology to allow an approved competitor to continue Wellcome's research into a migraine treatment.[170] Thus the approach of the courts would appear to diverge from the Federal Trade Commission and the United States Department of Justice, with the courts excluding patents from competition laws with very few, and practically very unlikely, circumstances.
The approach of a future Australian court would probably be similar to the Federal Court in APRA Ltd v Ceridale Pty Ltd and the courts in the United States and the European Community. That is, it would recognise that the purpose and scope of the exclusive rights of a patent may have some exposure to the Trade Practices Act 1974 (Cth), while being very reluctant to make such a finding unless there was very clear and extensive evidence of anti-competitive detriment (such as there was in the Radio Telefis case). The effect of this likely approach is to set the interface between patents and competition law according to the purpose and scope of the claims. For broad sequence and sequence application patents this is potentially a considerable exemption from competition.
There is some doubt as to the exact meaning and operation of s 51(3) of the Trade Practices Act 1974 (Cth). The Trade Practices Act 1974 (Cth) applies the competition rules to only those conditions in a license or assignment which 'relate to' the patent. Mason J in Transfield Pty Ltd v Arlo International Ltd[171] supported a wide construction of the term 'relates to' recognising the provision allowed a patentee to impose conditions on the license or assignment of the patent 'to protect the patentee's legal monopoly',[172] but then said 'conditions which seek to gain advantages collateral to the patent are not covered by s 51(3)'.[173] Barwick CJ and Wilson J considered the condition in question was entirely within s 51(3) and attracted the exemption but did not give detailed reasons for this conclusion.[174] Stephen J considered there was no evidence the condition, read either alone or in combination with other provisions of the license, had either the purpose or effect of substantially lessening competition[175] and Murphy J decided the matter on the basis of the Patents Act 1990 (Cth).[176]
It has been suggested that this case supports both the view that the Trade Practices Act 1974 (Cth) exempts any condition relating to the subject matter of the patent license or assignment and the view that only those conditions which do not seek a collateral advantage to the patented product or process are exempted.[177] The problem remains of defining the scope of the conditions that may be exercised as the patentee's exclusive rights and the likely rewards that should flow from those rights at the expense of competition in the market. However, it seems certain that this measure, as presently drafted, does extend to exempt conditions in licenses and assignments that are within the purpose and scope of the exclusive rights granted by the patent. The contentious issue is what additional conduct is exempt?
To resolve this impasse in practice, the Trade Practices Commission took guidance from Mason J's view as to how to apply s 51(3):
[I]f there is any doubt whether a condition relates to the subject matter of a license, the purpose and scope of the exclusive rights granted by the ... [patent] ... will be considered to determine whether a collateral advantage has been achieved by the condition'.[178]
These guidelines would seem to have been adequate and have probably been assisted by the exemptions having a narrow scope,[179] the fact that generally intellectual property rights do not result in substantial market power because there are usually actual or potential substitutes,[180] and that the exemption deals only with conditions in licenses and assignments. The Trade Practices Commission has opined that exclusive territorial license, territorial restraints, price restrictions, quota restrictions, quality restrictions, post license termination restrictions, sub-license restrictions, license back provisions, full or third line forcing (subject to s 144 of the Patents Act 1990 (Cth)), and leveraging which might contravene s 45 and s 47, would arguably be sufficiently connected to the patent to be within the scope of s 51(3), and therefore exempt.[181] This approach would seem to be broader than just protecting the purpose and scope of the patentee's exclusive rights and includes some conduct that is theoretically advantageous in encouraging broader uses of the protected innovation.[182]
Recent reviews of s 51(3) of the Trade Practices Act 1974 (Cth) have recommended s 51(3) be amended,[183] although similar recommendations in earlier reviews have been ignored by Parliament.[184] The National Competition Council recommended a narrowing of the operation of s 51(3) so that price and quantity restrictions and horizontal arrangements (between competitors) did not benefit from the exemption.[185] The Intellectual Property and Competition Review Committee recommended s 51(3) be replaced with provisions excluding conditions in licenses and contracts, arrangements and understandings that relate to a patent (and other intellectual property statutes) from Part IV and s 4D (exclusionary provisions), so long as the condition does not, or is not likely to result in, a substantial lessening of competition.[186] This was considered to be narrower than the price and quantity restrictions and horizontal arrangements which the National Competition Council considered had 'significant potential' to substantially lessen competition,[187] but 'an appropriate balance between the needs of the IP system and the wider goals of competition policy'.[188]
License and assignment exemptions from the Trade Practices Act 1974 (Cth) are arguably justified because they reward innovation so that innovators properly appropriate their surpluses with the associated dynamic efficiencies.[189] Another view is that intellectual property laws do not create legal or economic monopolies and so licensing and assignment exemptions simply provided greater certainty to patent licensors and assignors which reduces competition law compliance costs and encourages more licensing.[190] The Intellectual Property and Competition Review Committee recommendations will, in effect, exempt only contracts, arrangements and understandings which are exclusionary provisions,[191] price fixing,[192] secondary boycotts[193] and most exclusive dealings[194] which do not substantially lessen competition. All other conduct will still theoretically have to comply with the general regime of the Trade Practices Act 1974 (Cth).
The Trade Practices Commission's approach[195] and the modified approach suggested by the Intellectual Property and Competition Review Committee[196] will need to be applied to promote beneficial competition and avoid the likely non-tariff barriers of patent owners in increasingly globalised businesses.[197] Without further guidance from the Australian Competition and Consumer Commission, as recommended by the National Competition Council[198] and the Intellectual Property and Competition Review Committee,[199] the likely reach of these exemptions beyond the purpose and scope of the exclusive rights will remain unclear. The recommendations of the Intellectual Property and Competition Review Committee would seem to narrow the license and assignment condition exception by imposing the 'substantially lessening competition' threshold above which the Trade Practices Act 1974 (Cth) would apply while retaining the broad term 'relates to' in defining the scope of the intellectual property right's subject matter to which the exemption would apply. Presumably the 'relates to' requirement means the Trade Practices Commission's 'purpose and scope of the exclusive rights granted' rather than the uncertain view of the High Court in the Transfield case. The application of this recommendation will remain unclear until guidelines are developed dealing with the diversity of possible arrangements and how the Australian Competition and Consumer Commission proposes to view such arrangements. A useful example of such guidance has been provided by the Federal Trade Commission in the United States.[200] Again, the breadth of the patent will delineate the purpose and scope of the exclusive rights, which will then delineate the boundaries of the license and assignment (or contract, arrangement or understanding) condition exemptions. For broad sequence and sequence application patents this is potentially a considerable exemption from competition.
Recent decisions about the operation of the unlawful use of market power in s 46 may signal further restrictions on the manner in which the Trade Practices Act 1974 (Cth) deals with broad patents and in particular the license and assignment condition exemption. Section 46 is a significant restriction on all conduct, including the exemption of certain conditions in licenses and assignments, and the reading down of the potential operation of this provision is likely to increase the scope of a patentee's broad claims. Section 46 of the Trade Practices Act 1974 (Cth) proscribes a corporation with a substantial degree of power in a market from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor, preventing entry into a market or deterring or preventing a person from engaging in competitive conduct.[201] The object of s 46 is to protect the competitive process for the benefit of consumers generally.[202]
The decided cases leave open the defining features of a hypothetical competitive market and create some uncertainty as to what conduct is unlawful by a corporation with a substantial degree of power in a market. It is certainly open to question whether a patent holder would ever pass the threshold for market power,[203] especially as courts appear to favour characterising markets for intellectual property rights very broadly.[204] If this threshold is passed, the key element in any assessment of a breach of this provision by a patentee will be assessing the notion of 'taking advantage'. Some early authority supports the contention that relying on a statutory intellectual property right will not itself be 'taking advantage' of market power. Thus in Warman International v Envirotech Australia Pty Ltd[205] Wilcox J held that '[t]o exercise in good faith an extraneous legal right, though the effect may be to lessen, or even eliminate, competition, is to take advantage of that right, not of market power'.[206]
This decision pre-dated the economic perspective espoused by the High Court decision in Queensland Wire Industries Pty Ltd v Broken Hill Pty Ltd[207] where the majority found that 'taking advantage' merely meant 'using' (without any pejorative sense to misuse), and applied a test of whether a firm with market power could or would adopt the disputed conduct in a competitive market.[208] In that case BHP, as the only supplier of Y-bar for fencing posts and with sufficient market power, quoted an unreasonably high price to supply QWI, which was thus a constructive refusal to supply to prevent QWI competing with BHP's subsidiary. This was found to be an unlawful use of market power for the purposes of s 46 as BHP would have supplied QWI in a competitive market.
The recent Melway cases[209] reconsidered the application of the Queensland Wire decision.[210] Here the undisputed evidence on appeal in the Federal and High Courts showed a market in which Melway had substantial power and a refusal by Melway to supply street directories. The evidence showed that the existing distribution system was orderly and successful and changing the distribution system favoured by Melway was unlikely to increase overall sales, but rather take sales away from existing distribution networks and possibly expose their distributors to competition.[211] In the Full Federal Court, Sundberg and Finkelstein JJ both considered Melway's refusal to supply was only possible because there was no effective competitor and by refusing to supply there was a 'using' of market power for a proscribed purpose.[212] In contrast, Heerey J did not accept Melway's conduct was a 'taking advantage' because the evidence did not support a conclusion that in a more competitive market Melway would have supplied.[213] Melway argued the distribution system maximised sales and maintain customer service and customer demands, which Heerey J considered was 'rational and not inherently improbable' in a way that worked.[214] Heerey J stated: 'the existence of a legitimate business reason which would explain the impugned conduct irrespective of the degree of market power necessarily points against a conclusion that such conduct in fact involved taking advantage of that power'.[215]
The Melway majority in the High Court reviewed the Queensland Wire decision:
[T]he way to test whether BHP was taking advantage of its power was to ask how it would have been likely to behave in a competitive market. Exactly how competitive such a market might be, and the assumed structure of such a market, were open questions. The important thing was that, once it was concluded that in a competitive market BHP would have been constrained to supply QWI, and that BHP's ability to refuse to supply resulted from the absence of such constraint, it followed that, in refusing to supply (for an anti-competitive purpose), BHP was taking advantage of its market power'.[216]
The Melway majority considered that Melway's refusal to supply was a manifestation of its distribution system and so the 'real question' in issue was whether Melway, without its market power, could have maintained its distributorship system in a competitive market.[217] The majority accepted Heerey J's reasoning that Melway had the distributorship system in place before it attained market dominance and refusing to supply was not denying Melway sales Nor would there be any assumption of lost sales in a competitive market, and so there was no 'taking advantage' of its market power: 'The reasoning of Heerey J is to be preferred'.[218]
A closer analysis of Heerey J's decision shows that he was concerned that the Queensland Wire decision reflected BHP's failure to provide a 'legitimate' explanation for its conduct[219] and that it was significant that the Melway directory could not be obtained from another, albeit hypothetical, source, as Y-bar might have been in Queensland Wire.[220] In these circumstances, Heerey J did not consider the evidence supported the hypothesis that in a more competitive market Melway would have been compelled to supply.[221] In explaining his conclusions, Heerey J pointed to Hanks and Williams' analysis that taking advantage is a test of market efficiency,[222] and then cited examples from United States Supreme Court decisions, a Trade Practices Commission document and another academic work which supported his conclusion that 'taking advantage' of market power was lawful where it was use for an efficient economic objective.[223] While Heerey J, and the High Court majority, did not set out what efficiencies might justify using market power for a proscribed purpose, Heerey J provided some guidance:
Melway tendered a body of evidence as to the reasons for adopting its system. Wholesalers were dealing with customers in a market they knew as specialists. The wholesalers had a good understanding of customer requirements and an ability to sell different types of products to customers, giving supply and selling efficiencies. Major retailers like McEwans preferred 'distributors of substance' who could service the product adequately. Wholesalers were given confidence to invest in marketing and customer development and especially promotion which was a critical element for Melway's success. The wholesalers were permitted to maximise customer service and the meeting of customer needs including promotion. The wholesalers were able to service the public need for the product, including unprofitable small accounts ... All of this seems rational and not inherently improbable. And, importantly, Melway's system worked.[224]
Heerey J cited the Trade Practices Commission view that: 'the Commission accepts that it is not reasonable to expect a corporation with a substantial degree of market power to supply each and every existing or new wholesale or retail outlet if it is apparent that it would not be to its commercial advantage to do so'.[225] The Trade Practices Commission appeared to have in mind products that were technically sophisticated and required some special pre- or post-sales assistance.[226] However, Heerey J's conclusions go well beyond this:
It may be that the selling of the Melway directory (as distinct from its production) was not a high technology operation. But obviously enough the considerations which might amount to a legitimate business reason, in the present context of a book distribution system, are not limited by technology factors. Distribution involved intangible matters of fine commercial judgement, which the learned trial judge accepted as being genuinely made. The spectacular success of the Melway directory was unlikely to have been achieved without some contribution by the particular distribution system adopted. Melway was entitled to believe that, however good its particular mousetrap, the world was not going to beat a path to its door.[227]
The respondents in Melway argued that deciding whether to grant or refuse supply equated to a taking advantage of market power irrespective of what may or may not be done in a competitive market.[228] While the High Court's Melway majority expressly rejected this analysis, as contrary to the majority in Queensland Wire,[229] the majority judges did accept that some barriers to entry were common reasons for the existence of market power, including statutory monopolies.[230] Unfortunately the High Court did not give any further indication of what these might be and how their formulation of the 'taking advantage' test might be applied to such statutory monopolies.
Based on Heerey J's approach, the test of whether a patentee would be constrained in a competitive market with respect to a license and assignment condition beyond the purpose and scope of the exclusive rights may arguably be addressed by evidence of an economic efficiency. For example, patent pooling and cross licensing claims of broad sequences and applications that prevents competition might in some circumstances be considered efficient because without the collaboration further research and the making of a marketable product might be delayed or avoided altogether. Thus, patent pooling may be pro-competitive by disseminating new technology, clearing blocking positions, avoiding infringement litigation, integrating complementary technologies and reducing transaction costs.[231] Patent pooling may also have significant consequences for competition giving the patent owners significant power to control prices and distribution.[232] Following Heerey J's approach for this example, the question would now seem to be whether the conditions in patent pooling and cross licensing arrangements were efficient, rather than just whether there was mere use of market power for a proscribed purpose.
While the High Court would appear to accept efficiency arguments, these standards of acceptable efficiency are certainly not universal. As Kirby J, in dissent, points out:
If the purpose of s 46 of the Act is to foster competition in Australian markets as a means of promoting efficiency and consumer welfare, and to prevent market dominance from frustrating these objectives, the outcome favoured by the Federal Court appears to secure these results. The outcome now favoured by this [High] Court would appear to reinforce the power of the 'monopolist' to pursue its proscribed 'purpose' without the annoying hindrance of the Act. On the face of things, this appears a most curious outcome. It suggests (to my mind at least) that an incorrect approach may have been taken to elucidating the meaning of the words 'take advantage of', read in the context of the Act and given the Act's stated objectives.[233]
Kirby J's main concern in Melway was that consumers were paying a higher price as a result of the distribution system which imposed the market segments,[234] while the majority confined its consideration to whether Melway itself would suffer a reduction in the number of street directory sales.[235] As Kirby J points out, the reliance on Heerey J's reasoning that Melway would not have been denied sales[236] overlooked the available evidence of the effect of the distributorship system for consumers,[237] which was the rationale of the legislation and the group most likely to suffer detriment.[238]
The High Court's decision would therefore appear to have potentially narrowed the operation of s 46 in limiting the scope of unlawful anti-competitive conduct where economic efficiency arguments are considered relevant. Considering the economic efficiency arguments more broadly, the exclusive rights of a patent are justified to address a market failure,[239] and are generally assumed to produce overall economic benefit by promoting beneficial innovation.[240] This forms the basis for an argument that the majority of patenting practices might be expected to be economically efficient. For example
Field-of-use, territorial, and other limitations on intellectual property licenses may serve pro-competitive ends by allowing the licensor to exploit its property as efficiently and effectively as possible. These various forms of exclusivity can be used to give a licensee an incentive to invest in the commercialisation and distribution of products embodying the licensed intellectual property and to develop additional applications for the licensed property. The restrictions may do so, for example, by protecting the licensee against free-riding on the licensee's investments by other licensees or by the licensor. They may also increase the licensor's incentive to license, for example, by protecting the licensor from competition in the licensor's own technology in a market niche that it prefers to keep to itself.[241]
It is certainly open to the courts, and depending on the facts of the particular case, to now consider the boundaries between patents and competition law on the grounds of economic efficiency so that a patent only becomes unlawfully anti-competitive when the conduct extends beyond the intended reach of the statutory monopoly (as in Radio Telefis). For broad sequence and sequence application patents this is a significant development as a number of patenting practices, and licensing and assignment practices in particular, have theoretical efficiencies which in the past, when 'take advantage' merely meant 'use', may have been considered to be unlawfully anti-competitive. As Kirby J points out, corporations with market power prohibiting supply and price competition to the disadvantage of competitors, healthy competition and consumers,[242] would now seem to be a real and lawful possibility, with the consequence likely to be restricted access and higher prices for consumers. However, the courts approach to patents on this matter cannot be predicted with certainty:
In applying the details of antitrust law to a plethora of business transactions dealing with patents ... the result in each individual case will largely turn upon one's own personal set of priorities as to the relative importance of intellectual property and antitrust. This in turn, depends upon what one sees as the true goals of both intellectual property law and antitrust law.[243]
The priorities of individual judges in Australia are largely untested on the true goals of intellectual property and competition laws, although Melway suggests that healthy competition and consumers are not the only priorities.
The analysis of recent court decisions in this article shows the Patent Office and courts are reading down the anti-competitive measures in the Patents Act 1990 (Cth) and that very few of the legislated pro-competitive measures in the Trade Practices Act 1974 (Cth) are likely to apply to limit the anti-competitive consequences of broad patents for gene and gene sequences and their applications. This means the patentee's 'exclusive rights' are being granted to a very wide range of products and processes for a very limited contribution to innovation, with minimal consideration for their impact on competition and a very limited scope for the competition laws to limit a patentee's anti-competitive conduct.
Generally, anti-competitive concerns about patents are of minimal consequence because, '[i]n practice ... a patent holder can rarely act as a pure monopoly, because of the availability of alternative and substitute products and processes, and also because some scope for imitation almost always exists'.[244] In an analysis of substitutes for commercially viable legally protected products or processes the Organisation for Economic Co-operation and Development found approximately 25% have no substitute with significant market power from a patent grant being considered 'the exception rather than the rule'.[245] But, for gene and gene sequence patenting very broad claims to both sequences[246] and sequence applications[247] effectively restrict the use of the basic patented genetic materials (including the gene and gene sequences) and the application of those materials across a considerable range of products and processes.[248] This practice has the potential severely to limit the substitution and imitation of the patented genetic material related products and processes.
The recently published opinion of Judge Young in the United States District Court in Amgen Inc v Hoechst Marion Roussel Inc and Transkaryotic Therapies Inc[249] illustrates the limited scope for genetic material patents to be substituted or imitated. This case concerned a dispute about erythropoietin, which is a hormone that promotes the production of red blood cells in bone marrow tissue and has application in treating anaemia. For Amgen, the patented erythropoietin products were reported to have sales of $1.96 billion in 2000 and account for approximately 60% of Amgen's revenue.[250] The Amgen patents claimed products and processes for a cloned erythropoietin gene linked to regulatory sequences inserted into the genome of a mammalian cell to produce erythropoietin that could be purified from a culture and then used as an active pharmaceutical. Hoechst Marion Roussel Inc and Transkaryotic Therapies Inc (collectively called TKT) used its own gene targeting technology to produce erythropoietin. TKT's technology was unique because there was no need to introduce a cloned erythropoietin gene, rather the 'natural' genes in the cells were activated to produce higher levels of erythropoietin. This resulting erythropoietin could then be purified from a culture and used as an active pharmaceutical. Judge Young accepted TKT's technology was substantially different and did not infringe Amgen's claims. However, Amgen's stranglehold on the erythropoietin protein as an application of its other claims to the inserted cloned erythropoietin gene construct was decisive. So, even though TKT produced erythropoietin by an entirely different technique, Amgen's earlier claims to the erythropoietin gene product were broad enough to lock out the competing technology and prevent substitution or imitation.[251]
Where patented products and processes cannot be substituted or imitated the potential for a patentee to exercise their exclusive rights anti-competitively is considerable. For example, Amgen, through its accumulation of erythropoietin patents, has become the de facto owner of erythropoietin. Other examples of patents delivering effective ownership of an entire product or process include stem cells[252] and transgenic cotton.[253] With effective control of a product or process the patentee can control access and raise prices to the detriment of consumers.
For countries like Australia there is the added concern that the increasing rate of patenting in Australia is attributable almost entirely to non-resident inventors registering in the Australian jurisdiction,[254] with some 90% of patent grants in Australia being to non-residents.[255] The Australian pharmaceutical market which makes up only about 1% of the total world pharmaceutical market,[256] but it is extensively integrated into the international market and dominated by a small number of large multinational corporations.[257]The domestic benefits from patenting are, therefore, likely to be minimal and raise the spectre that 'many patents granted to foreigners in Australia (for example, relating to agrochemical and pharmaceutical products) frequently are utilised not to support the establishment of local enterprises or export trade but rather as non-tariff barriers to provide protection for imported products'.[258] This seems likely because key gene patents are being accumulated by predominantly large multinational corporations[259] and they are establishing dominance over the markets for the products and processes of genetic materials and technologies.[260]
Another key concern in Australia is likely to be broad patents that discourage or restrict follow-on R&D by ceding control of the future developments to a single entity.[261] In these circumstances, balancing the rights of the original innovator and adequately providing for the follow-on application and innovation becomes critical. With the majority of patents owned by non-residents, Australia's competitive advantage may well be in increasing the incentives for follow-on R&D at the expense of the original innovator.[262] But, by failing to apply the threshold criteria for a patent as set out in s 18 of the Patents Act 1990 (Cth) the Patents Office and the courts are shifting the balance in favour of the original innovator and against the follow-on innovator. This effectively reduces the incentives, and even the opportunity, for the latter to innovate. The favouring of the original innovator is unlikely to be ameliorated by the pro-competition laws with the original innovator's exclusive rights being practically exempt from the Trade Practices Act 1974 (Cth) and its pro-competition laws.
Unfortunately, the recent review of the Patents Act 1990 (Cth) and the Competition Principles Agreement by the Intellectual Property and Competition Review Committee[263] and the National Competition Council[264] did not address these concerns in any detail. These reviews were founded on the requirements of the Competition Principles Agreement that 'legislation which restricts competition should only be retained if the benefits to the community as a whole outweigh the costs' and if the objectives of the legislation cannot be achieved by other means.[265] Inherent in this analysis is a view about the best method of achieving competition,[266] although the Intellectual Property and Competition Review Committee appears to have adopted a erratic approach about intellectual property regulation. The Committee accepted almost without question or comment the benefit of patenting of gene and gene sequence[267] while advocating a requirement of a demonstrated need before restricting competition for parallel import restrictions over copyright materials.[268]
These apparently conflicting views were not explained even though the Committee acknowledged that 'patenting genes per se is still controversial' citing submissions reflecting the controversy.[269] The subsequent analysis reverted to the trite theoretical distinction between discovery and invention which does not assist in practically identifying economically useful DNA based innovation because of the routine techniques used to isolate and identify most genetic materials for which patents are then granted and the incredible broad ambit of the 'manner of manufacture' test following the NRDC case.[270] The Committee's analysis also completely failed to examine the consequences of the Patent Office's practice of applying a very, very low threshold of novelty and inventive step (non-obviousness) for genetic materials[271] and the likely consequences of this practice on access, prices and innovation. Perhaps more significantly, the Committee addressed patenting generally, and did not consider the different uses of patents in different industries.,[272] In particular, it did not consider the special circumstances of patents in the pharmaceutical (and agricultural) industries where 'inventing around' patents was acknowledged to be very limited,[273] and which rely primarily on patents for their marketing strategy and competitive advantage.[274]
In the past, most pharmaceutical products were chemical entities,[275] while future products promise to be based on genetic materials (for the diagnosis and treatment of genetic conditions).[276] This makes gene and gene sequence patents a key factor in sustaining pharmaceutical prices and ensuring the financial return to the pharmaceutical industry,[277] and as a significant issue in considering the likely impact of patenting on competition. This failure of the Intellectual Property and Competition Review Committee to examine the role of patenting in different industries was a significant oversight. The inability to substitute or imitate broadly claimed genetic material patents and the concentration of the exclusive rights[278] in large vertically integrated corporations[279] can be expected to extract high social costs in Australia through a prolonged period of higher prices, restricted access and curtailed innovation. It might be said about the Intellectual Property and Competition Review Committee's review again: 'A good opportunity to adjust an ancient institution to the current needs of the Australian economy has been missed'.[280]
[*] Genomic Interactions Group, Research School of Biological Sciences, Australian National University. The assistance of Dr Catherine Pickering, Dr Barbara Hocking, Lisa Baird and the anonymous referees is appreciated and acknowledged.
[1] Trade Practices Commission, Application of the Trade Practices Act to Intellectual Property (1991) 8.
[2] Ibid.
[3] Such as, 'the uncertainty of pay off from R&D and innovation activity' and 'the limited ability of the inventor/innovator to appropriate profits arising from the use of the new knowledge generated': see Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia (1984) 12; Bureau of Industry Economics, The Economics of Patents, Occasional Paper No 18 (1994) 13.
[4] Trade Practices Commission, above n 1, 8; for a review of the policy objectives of patenting see Thomas McCarthy, 'Intellectual Property and Trade Practices Policy: Coexistence or Conflict? The American Experience' (1985) 13 Australian Business Law Review 198, 200-203.
[5] See for example, Second Reading to the Intellectual Property Laws Amendment Act 1998 (Cth): Commonwealth, Parliamentary Debates, House of Representatives, 26 November 1997, 11274 (Warren Truss, Minister for Customs and Consumer Affairs); but for some criticism of this view see Industrial Property Advisory Committee, above n 3, 12 and 79; Trade Practices Commission, above n 1, 8.
[6] Industrial Property Advisory Committee, above n 3, 13.
[7] Patents Act 1990 (Cth) s 67 provides a minimum term of 20 years from the lodgement of a claim and s 77 provides the term may be extended for certain pharmaceuticals up to 25 years from lodgement.
[8] Patents Act 1990 (Cth) s 13(1); Industrial Property Advisory Committee, above n 3, 12.
[10] Ibid Sch 1.
[11] Ibid.
[12] National Competition Council, Review of Sections 51(2) and 51(3) of the Trade Practices Act 1974 (1999) 167 and the references to the submissions to the inquiry; Intellectual Property and Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement (2000) 207; Industrial Property Advisory Committee, above n 3, 25.
[13] Trade Practices Act 1974 (Cth) s 45A(1); noting some joint ventures (s 45A(2)) and joint advertising (s 45(4)) agreements may not be deemed illegal per se.
[14] Trade Practices Act 1974 (Cth) s 45D and s 45DA.
[15] Ibid s 45(1)(a), (2)(a)(i) and (2)(b)(i).
[16] Ibid s 47(1), (6) and (7).
[20] Ibid s 47(1), (2), (3), (4), (8)(a), (8)(b), (9)(a) and (9)(b).
[22] Ibid s 46(1)(a).
[23] Ibid s 46(1)(b).
[24] Ibid s 46(1)(c).
[27] Re Queensland Cooperative Milling Association Ltd and Defiance Holdings Ltd (1976) 25 FLR 169, 189.
[28] Queensland Wire Industries Pty Ltd v Broken Hill Pty Ltd [1989] HCA 6; (1989) 167 CLR 177, 191. However, this perspective may reflect, following the dramatic effects of the 'Chicago School' of economic thought, a competitive process rather than a rivalry between individuals: McCarthy, above n 4, 208.
[29] The Patents Amendment Act 2001 (Cth) introduced a 'balance of probabilities' test for novelty and inventive step: see Commonwealth, Parliamentary Debates, House of Representatives, 24 May 2001, 26974 (Warren Entsch, Parliamentary Secretary to the Minister for Industry, Science and Resources).
[30] Commissioner of Patents v Microcell Ltd [1958] HCA 58; (1959) 102 CLR 232, 244.
[31] International Business Machines Corporation v Commissioner of Patents (1991) 22 IPR 417.
[32] Trade Practices Act 1974 (Cth) s 88.
[33] Re 7 Eleven Stores Ltd (1994) ATPR 41-357, 42,677.
[34] Australian Competition and Consumer Commission, Guide to Authorisations and Notifications (1995) 19.
[35] Lord Parker in Attorney General v Adelaide Steamship Co (1913) AC 781 expressed a patent as the bargain between the community and the inventor with the consideration moving to the public for the derogation of the right to freedom of trade being the promotion of public benefit innovation and disclosure of the invention. This is consistent with the objects of the Trade Practices Act 1974 (Cth) s 2: 'to enhance the welfare of Australians through the promotion of competition and fair trading'.
[36] For a review of the public policy considerations for gene and gene sequence patents see Miranda Forsyth, 'Biotechnology, Patents and Public Policy: A Proposal for Reform in Australia' (2000) 11 Australian Intellectual Property Journal 202.
[37] Halsbury's Statutes of England (2nd ed, 1950) vol 17, 619 (word spellings updated).
[38] Charles Lawson, 'Patenting Genetic Diversity—Old Rules may be Restricting the Exploitation of a New Technology' (1999) 6 Journal of Law and Medicine 373, 381-84.
[39] Charles Lawson and Catherine Pickering, 'Patenting Genetic Materials—Failing to Reflect the Value of Variation in DNA, RNA and Amino Acids' (2000) 11 Australian Intellectual Property Journal 69, 78-79.
[40] The recent statement by the United States Patent and Trade Mark Office responding to comments about the proposed 'utility' requirements (United States Patent and Trade Mark Office, 'Revised utility examination guidelines—examination request' (1999) 64 Federal Register 71440; corrected at (2000) 65 Federal Register 3425) illustrates the very limited scope for future innovators to use patented gene and gene sequences:
'Several comments stated that the DNA patent claim scope should be limited to uses that are disclosed in the patent application and that allowing patent claims to encompass 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. Response: The comment is not adopted. A patent on a composition gives exclusive rights to the composition for a limited time, even if the inventor discloses only a single use for the composition. Thus, a patent granted for an isolated and purified DNA composition confers the right to exclude others from any method of using the DNA composition, for up to 20 years from the filing date. This result flows from the language of the statute itself. When the utility requirement and other requirements are satisfied by the application, a patent granted provides a patentee with the right to exclude others from ... 'using' the patented composition of matter ... Where a new use is discovered for a patented DNA composition, that new use may qualify for its own process patent, notwithstanding that the DNA composition itself is patented.
United States Patent and Trade Mark Office, 'Utility examination guidelines' (2001) 66 Federal Register 1092, 1095; for an example of the consequences of broad claiming in the Australian context see Charles Lawson and Catherine Pickering, 'The Conflict for Patented Genetic Materials under the Convention on Biological Diversity and the Agreement on Trade Related Aspects of Intellectual Property Rights' (2001) 12 Australian Intellectual Property Journal 104.
[41] Genetics Institute Inc v Kirin-Amgen Inc (No 3) (1998) 41 IPR 325; the recent decisions in Amgen Inc v Hoechst Marion Roussel Inc and Transkaryotic Therapies Inc, 126 F Supp 2d 69 (2001) and Amgen Parties v Roche Parties [2001] England and Wales High Court (Patents Court) 433 (11 April 2001) showed the courts accepted that alternative ways of producing erythropoietin through genetic manipulation could not substitute or imitate Amgen's patented cloned gene product.
[42] Hoffmann-La Roche AG v Bresagen Limited and NE Biolabs [1997] Australian Patents Office 57 (12 November 1997).
[43] Synaptic Pharmaceutical Corporation v Astra Aktiebolag [1988] Australian Patents Office 49 (9 September 1998).
[44] Reviewed in Lawson and Pickering, above n 39, 78-79; another examples is the exclusion of superior diagnostic tests: see Murex Diagnostics Australia Pty Ltd v Chiron Corporation and Ortho Diagnostic Systems Inc, Federal Court, NG 380/1996 (Statement of Claim); Mark Lawson, 'Patent Fights over Hepatitis C Test Kit Reverberates around the World' (1994) 370 Nature 493.
[45] Patents Act 1990 (Cth) Sch 1.
[46] Ibid s 18(1)(a).
[47] CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260, 295.
[48] NRDC v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252, 269 ('NRDC case').
[49] Noting that the Patents Act 1977 (UK) no longer makes any reference to 'manner of manufacture' or the Statute of Monopolies.
[50] NRDC v Commissioner of Patents, above n 48, 269; CCOM Pty Ltd v Jiejing Pty Ltd, above n 47, 287-295; Industrial Property Advisory Committee, above n 3, 40.
[51] IP Australia, Australian Patent Office Manual of Practice and Procedure, Vol 2—National (1996) 8.2.13-8.2.15; see also Andrew Christie, 'Some Observations on the Requirement of Inherent Patentability in the Context of Business Method Patents' (2000) 41 IP Forum 16, 17.
[52] IP Australia, ibid 8.2.11-8.2.12 and 8.2.16-8.2.17; see also Christie, ibid.
[53] IP Australia, ibid 8.2.14 and 8.2.9; see also Christie, ibid.
[54] IP Australia, ibid 8.2.2-8.2.8; see also Christie, ibid.
[55] Jack Starke, 'The Patenting of Animal Forms with New Traits' (1987) 61 Australian Law Journal 324, 325-326.
[56] Ranks Hovis McDougall Ltd's Application (1976) 46 Office Journal of Patents (AOJP) 3915.
[57] NRDC v Commissioner of Patents, above n 48.
[58] Diamond v Chakrabarty, 447 US 303 (1980).
[59] Bristol-Myers Squibb v FH Faulding & Co Ltd [2000] FCA 316; (2000) 97 FCR 524.
[60] Christie, above n 51, argues the NRDC v Commissioner of Patents, above n 48, test is so broad that any practical restriction has been 'annihilated'; this now includes business systems: see Welcome Real-Time SA v Catuity Inc [2001] FCA 445.
[61] IP Australia, Australian Patents for: Microorganisms, Cell Lines, Hybridomas, Related Biological Materials and their Use, Genetically Manipulated Organisms (1998) 1-2.
[62] Patents Act 1990 (Cth) s 18(2).
[63] IP Australia, above n 61, 1.
[64] [1995] HCA 15; (1995) 183 CLR 655 ('Mirabella').
[65] Ibid 664 (Brennan, Deane and Toohey JJ); Mary Padbury, 'Inventiveness Apart from Novelty and Inventive Step—The High Court's decision on manner of manufacture in Philips and Mirabella' (1998) 9 Australian Intellectual Property Journal 161.
[66] [1998] HCA 19; (1998) 194 CLR 171 (Brennan CJ, Gaudron, McHugh and Gummow JJ); note that this was an appeal about the construction of Patents Act 1952 (Cth) s 100 and in particular the meaning of invention with respect to manner of manufacture. Significantly, the term 'invention' is similarly defined in the Patents Act 1990 (Cth).
[67] Ibid 185-93.
[68] Ibid 193-201.
[69] Ibid 200.
[70] Above n 59.
[71] Ibid 532-3.
[72] Ibid 541; noting that in N V Philips Gloeilampenfabrieken and Philips Lighting Pty Ltd v Mirabella International Pty Ltd, above n 64, obviousness (or lack of inventive step) was not at issue as the appeal was confined to the opening words of s 18(1).
[73] Bristol-Myers Squibb Company v FH Faulding Pty Ltd, above n 59, 541; see also, CCOM Pty Ltd v Jiejing Pty Ltd, above n 47, 285 which was cited as further authority for this proposition.
[74] Bristol-Myers Squibb Company v FH Faulding Pty Ltd, ibid 541-2.
[75] Ibid 542; in the House of Lords, albeit applying different laws, Lord Hoffman in the Biogen Inc v Medeva plc [1997] RPC 1, 45 warned:
One can of course imagine cases in which the alleged subject matter is so obviously not an invention that it is tempting to take an axe to the problem by dismissing the claim without inquiring too closely into which of the conditions has not been satisfied ... Judges would therefore be well advised to put on one side their intuitive sense of what constitutes an invention until they have considered the questions of novelty, inventiveness and so forth.
[76] N V Philips Gloeilampenfabrieken and Philips Lighting Pty Ltd v Mirabella International Pty Ltd, above n 64, 670 (Dawson and McHugh JJ).
[77] Ibid 670-671.
[78] Ibid 662.
[79] Above n 66, 198.
[80] [1999] FCA 1369; (2000) 99 FCR 151.
[81] Above n 30, 246.
[82] Above n 80, 196.
[83] Ibid 196.
[84] Above n 59, 536.
[85] For a review of the relatedness of genetic materials in the context of patenting see Lawson and Pickering, above n 39, 69-70.
[86] For example Bristol-Myers Squibb v FH Faulding & Co Ltd, above n 59, 566-7; noting comments from the High Court suggest public policy arguments are relevant to an assessment of what constitutes appropriate subject matter for a patent grant: see Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd, above n 66, 190 (Brennan CJ, Gaudron, McHugh and Gummow JJ).
[87] For example Bristol-Myers Squibb v FH Faulding & Co Ltd, ibid.
[88] Ibid 569.
[89] Ibid 530.
[90] Ibid (Black CJ, Lehane and Finkelstein JJ), Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1 (Lockhart and Wilcox JJ); the converse approach has been adopted in Anaesthetic Supplies Pty Ltd v Rescare Ltd (Sheppard J) and in Bristol-Myers Squibb v FH Faulding & Co Ltd (1998) 41 IPR 467 (Heerey J).
[91] Ibid 530.
[92] Commonwealth, Parliamentary Debates, Senate, 22 August 1990, 1910 (Senator John Coulter), 17 September 1990, 2478 (Senator John Coulter) and 20 September 1990, 2653 (Senator John Coulter); the Patents Amendment Bill 1996 (Cth), which also proposed excluding gene and gene sequences has never progressed past the second reading stage in the Senate despite being prorogued to the 39th Parliament; similar amendments were again rejected in the Patents Amendment Bill 2001 (Cth): Commonwealth, Parliamentary Debates, Senate, 27 September 2001, 27427 (Senator Natasha Stott Despoja).
[93] Jill McKeough and Andrew Stewart, Intellectual Property in Australia (2nd ed, 1997) 297 observe that during re-examination the prior art base does not include the doing of an act (s 98(2)) and so the re-examination is confined only to documentary publications without any apparent reason; note Patents Act 1990 (Cth) s 45(3) provides the Commissioner may direct an applicant to disclose the results of searches carried out for corresponding applications made outside Australia.
[94] Meyers Taylor Pty Ltd v Vicarr Industries Ltd [1977] HCA 19; (1977) 137 CLR 228, 235.
[95] For a recent statement of the test and its application, see ICI Chemicals and Polymers Ltd v The Lubrizol Corporation Inc [1999] FCA 345, [93] (Emmett J).
[96] Minnesota Manufacturing and Mining Co v Beiersdorf (Australia) Ltd [1980] HCA 9; (1980) 144 CLR 253, 298.
[97] Lawson and Pickering, above n 39, 72-76.
[98] This is considered 'trite law': Meyers Taylor Pty Ltd v Vicarr Industries Ltd, above n 94, 249 (Aikin J); recently considered in Aktiebolaget Hassle v Alphapharm Pty Ltd [2000] FCA 1303, [31].
[99] The Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd [1981] HCA 12; (1981) 148 CLR 262, 280.
[100] Commissioner of Patents v Microcell Ltd, above n 30, 244.
[101] International Business Machines Corporation v Commissioner of Patents, above n 31.
[102] (1996) 33 IPR 557.
[103] Ibid 573.
[104] Genetics Institute Inc v Kirin-Amgen Inc (No3) [1999] FCA 742; (1999) 92 FCR 106.
[105] Industrial Property Advisory Committee, above n 3, 46; Department of Industry, Science and Resources, National Innovation Summit—Working Group on Managing Intellectual Property—Framework Paper (1999) 63; Intellectual Property and Competition Review Committee, above n 12, 156.
[106] Patents Act 1990 (Cth) s 7(2) and (3).
[107] Industrial Property Advisory Committee, above n 3, 46; National Innovation Summit, above n 105, 64; Intellectual Property and Competition Review Committee, above n 12, 156.
[108] Department of Industry, Science and Resources, Backing Australia's Ability—An Innovation Action Plan for the Future: Facts Sheet 2—Intellectual Property (2001) 1.
[109] Commonwealth, Parliamentary Debates, House of Representatives, 24 May 2001, 26974 (Warren Entsch, Parliamentary Secretary to the Minister for Industry, Science and Resources).
[110] Ibid.
[111] [1996] APO 3 (18 January 1996).
[112] For a further analysis and examples see Lawson and Pickering, above n 39, 72-76.
[113] Transfield Pty Ltd v Arlo International Ltd [1980] HCA 15; (1980) 144 CLR 83, 99 (Mason J) which reviews the English authorities; note in particular Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] UKHL 5; [1955] 2 All ER 657, 669 (Lord Oaksey).
[114] Industrial Property Advisory Committee, above n 3, 27.
[115] Above n 113.
[116] Ibid 92 (Barwick CJ); 95-97 (Stephen J); 102 (Mason J); 107-08 (Wilson J).
[117] Ibid 105 (Murphy J).
[118] Industrial Property Advisory Committee, above n 3, 27-32.
[119] Intellectual Property and Competition Review Committee, above n 12, 162.
[120] Industrial Property Advisory Committee, above n 3, 28.
[121] Intellectual Property and Competition Review Committee, above n 12, 162.
[122] The 'prescribed court' in this instance is the Federal Court as the regulations do not provide for a court and Patents Act 1990 (Cth) s 154(1) provides: 'The Federal Court has jurisdiction with respect to matters arising under this Act'.
[123] Patents Regulations 1991 (Cth) r 12.1(1).
[124] [1969] HCA 61; (1969) 119 CLR 572.
[125] Which was to be determined at the time of the hearing, ibid 575.
[126] Ibid 578-79.
[127] Ibid 579-82.
[128] Ibid 583.
[129] Ibid 583.
[130] Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134, 139 (Bowen CJ); 167 (Deane J).
[131] The only reported cases are Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation, above n 124 and Wissen Pty Ltd v Lown (1987) 9 IPR 124.
[132] Industrial Property Advisory Committee, above n 3, 28; Intellectual Property and Competition Review Committee, above n 12, 162.
[133] Industrial Property Advisory Committee, ibid 27-32.
[134] Ibid 32-33.
[135] Intellectual Property and Competition Review Committee, above n 12, 163.
[136] Ibid 163.
[137] Ibid.
[138] Ibid.
[139] Part of 'The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations' signed by ministers at Marrakech on 15 April 1994 and came into force on 1 January 1995. This agreement formed part of the trade negotiations started in Punta del Este, Uruguay in September 1986 that created the World Trade Organisation.
[140] Bristol-Myers Squibb v FH Faulding & Co Ltd, above n 59, 568.
[141] WT/DS/114 (17 March 2000).
[142] Review in Charles Lawson, 'Canada v European Union—Competition and Patents at the WTO' (2000) 28 ACCC Journal 1.
[143] Queensland Wire Industries Pty Ltd v Broken Hill Pty Ltd, above n 28, 188 (Mason CJ and Wilson J); 200 (Dawson J); Trade Practices Commission v Ansett Transport Industries (Operations) Pty Ltd (1978) 32 FLR 305 (Federal Court); Re Queensland Cooperative Milling Association Ltd and Defiance Holdings Ltd (1976) 25 FLR 169 (Australian Competition Tribunal).
[144] Trade Practices Act 1974 (Cth) s 50 and s 50A; Trade Practices Commission, above n 1, 1; this is a significant issue as mergers between corporations with broad patent rights to materials (including gene sequences) and applications have the potential to restrict competition for research and products: see for example the patent issues associated with the merger between Ciba-Geigy Limited and Sandoz Limited to form Novartis AG: In re Ciba-Geigy Limited, 'Analysis to Aid Public Comment' (1997) 62 Federal Register 409.
[145] National Competition Council, above n 12, 151 and 156-67.
[146] Although, conduct under Part IV and other Parts of the Trade Practices Act 1974 (Cth) may be exempted by regulation according to Trade Practices Act 1974 (Cth) s 172.
[147] Trade Practices Act 1974 (Cth) s 46 and s 46A.
[149] Frances Hanks and Phillip Williams, 'Implications of the Decision of the High Court in Queensland Wire' (1990) 17 Melbourne University Law Review 437, 454.
[150] McCarthy, above n 4, 199.
[151] National Competition Council, above n 12, 182-3.
[152] Warman International v Envirotech Australia Pty Ltd (1986) 11 FCR 478, 502.
[153] Examples include Ah Toy Pty Ltd v Thiess Toyota Pty Ltd (1980) 30 ALR 271 and Broderbund Software Inc v Computermate Products (Aust) Pty Ltd (1992) 22 IPR 215 where the market was broadly defined so that the Trade Practices Act 1974 (Cth) had no application.
[154] (1990) 97 ALR 497.
[155] Ibid 500.
[156] Ibid 511.
[157] Ibid.
[158] For examples see Etablissements Consten SA and Grundig-Verkaufs-Gmbh v EC Commission [1966] CMLR 418 (applying Treaty of Rome Art 85); Parke, Davis & Co v Probel [1968] CMLR 47 (applying Treaty of Rome Art 86).
[159] Radio Telefis Eireann and Independent Television Publications Ltd v EC Commission [1995] 4 CMLR 718, [35]-[36] ('Radio Telefis').
[160] Ibid [38].
[161] [1989] 4 CMLR 122.
[162] Ibid [8].
[163] Above n 159.
[164] Reviewed in Abraham van Melle, 'Refusal to License Intellectual Property Rights: the Impact of RTE v EC Commission (Magill) on Australian and New Zealand Competition Law' (1997) 25 Australian Business Law Review 4 which argues this case has application in Australia and New Zealand.
[165] United States Department of Justice and Federal Trade Commission, Anti-Trusts Guidelines for the Licensing of Intellectual Property (1995) s 2.1.
[166] For example Eastman Kodak Co v Image Technical Services Inc 504 US 451 (1992) where the Supreme Court found Kodak's refusal to supply replacement parts except to buyers of their products who used their services could have been an unlawful anti-competitive practice and remitted the matter for trial. At trial Kodak raised the issue of patent and copyright protection for its parts. This was rejected on evidence that it was a pretext: see Image Technical Services Inc v Eastman Kodak Co 125 F3d 1195 (1997) 1201.
[167] Independent Service Organizations Antitrust Litigation 203 F3d 1322 (2000) 1327-28.
[168] Townshend v Rockwell International Corporation 2000 US Dist LEXIS 5070 [23].
[169] In re Ciba-Geigy Limited 123 Federal Trade Commission 842 (1997).
[170] In re Glaxo PLC 119 Federal Trade Commission 815 (1995).
[171] Above n 113.
[172] Ibid 103.
[173] Ibid 103.
[174] Ibid 92 (Barwick CJ); 108 (Wilson J).
[175] Ibid 97; Stephen J also said the deeming provisions of Trade Practices Act 1974 (Cth) s 45A did not affect his conclusions.
[176] Ibid 105.
[177] Trade Practices Commission, above n 1, 13; Intellectual Property and Competition Review Committee, above n 12, 207.
[178] Trade Practices Commission, ibid.
[179] For example, when Trade Practices Act 1974 (Cth) s 45 and s 47 apply, s 46 will generally also apply: National Competition Council, above n 12, 216-219, although the National Competition Council 'accepts that there is a significant amount of conduct that may breach s 45 and s 47 without breaching s 46' (217).
[180] National Competition Council, ibid 157-60, 217; see for examples the United States Department of Justice and Federal Trade Commission, above n 165, s 2.2; Organisation for Economic Co-operation and Development, Competition Policy and Intellectual Property Rights (1989) 15.
[181] Trade Practices Commission, above n 1, 21-30.
[182] National Competition Council, above n 12, 151 and 164-5.
[183] Ibid 152; Intellectual Property and Competition Review Committee, above n 12, 215.
[184] Industrial Property Advisory Committee, above n 3, 25.
[185] National Competition Council, above n 12, Chapter C8.
[186] Intellectual Property and Competition Review Committee, above n 12, 215.
[187] National Competition Council, above n 12, 151.
[188] Intellectual Property and Competition Review Committee, above n 12, 213.
[189] Organisation for Economic Co-operation and Development, above n 180, 6 and 11; although incentives to innovate are believed to be significantly reduced in monopolised industries (6).
[190] National Competition Council, above n 12, 150.
[191] Trade Practices Act 1974 (Cth) s 45 and s 4D.
[193] Ibid (Cth) s 45D and s 45DA .
[194] Ibid (Cth), s 47, except s 47(6) and (7).
[195] Trade Practices Commission, above n 1, 21-31.
[196] Intellectual Property and Competition Review Committee, above n 12, 215.
[197] Allan Fels, 'The Trade Practices Act—Past, Present and Future' (20001) 9 Trade Practices Law Journal 5, 14-17.
[198] National Competition Council, above n 12, 245.
[199] Intellectual Property and Competition Review Committee, above n 12, 215.
[200] United States Department of Justice and Federal Trade Commission, above n 165.
[201] The Trade Practices Amendment Bill (No 1) 2000 (Cth) proposes an amendment which will allow the onus of proof to be reversed in an action brought by the Australian Competition and Consumer Commission where a corporation has a substantial degree of market power and has taken advantage of that power. In these circumstances the corporation will be required to establish that it has not taken advantage of its power for one of the proscribed purposes set out in Trade Practices Act 1974 (Cth) s 46(1).
[202] O'Keeffe Nominees Pty Ltd v BP Australia Ltd (1990) ATPR 41-057, 51,741 (Spender J); Competition Policy Reform Act 1995 (Cth) s 2.
[203] Hanks and Williams, above n 149, 452.
[204] For example Ah Toy Pty Ltd v Thiess Toyota Pty Ltd, above n 153, rejected a market for the Toyota brand in favour of the motor vehicle market and Broderbund Software Inc v Computermate Products (Aust) Pty Ltd, above n 153, rejected a market for a particular computer game in favour of a national market for such games; Hanks and Williams, above n 149, 452, suggest even a pharmaceutical patent with no close substitutes might be considered in a broader range of activities of the patent owning company, such as research and marketing.
[205] Above n 152.
[206] Ibid 502; noting that this decision does not appear to have taken into account the construction of Trade Practices Act 1974 (Cth) s 51(1) which clearly contemplates intellectual property rights being subject to the Patents Act 1990 (Cth).
[207] [1989] HCA 6; (1989) 167 CLR 177; noting that Dawson J (202) expressly considered Warman International v Envirotech Australia Pty Ltd, above n 152, might have been wrongly decided; reviewed in Hanks and Williams, above n 149.
[208] Queensland Wire Industries Pty Ltd v Broken Hill Pty Ltd, above n 28; Mason CJ and Wilson J (with whom Dawson J (202) and Toohey J (216) essentially agreed): 'If BHP lacked that market power—in other words, if it were operating in a competitive market—it is highly unlikely that it could stand by, without any effort to compete and allow the [QWI] to secure its supply of Y-bar from a competitor' (192); Deane J adopted a different approach: 'In refusing to supply in order to achieve that purpose [of preventing QWI from becoming a manufacturer and wholesaler of star pickets] BHP has clearly taken advantage of that substantial power in the market' (197): for a consolidated view of the test, see Lockhart J in Dowling v Dalgety Australia Ltd (1992) ATPR 41-165, 40,277.
[209] [2001] HCA 13; (2001) 178 ALR 253 (High Court); [1999] FCA 664; (1999) 90 FCR 128 (Full Federal Court); (1998) 42 IPR 627 (Federal Court).
[210] Recent reviews include Stephen Corones, 'Section 46 of the Trade Practices Act: Rules of Battle Revisited' (2001) 29 Australian Business Law Review 252; Michael O'Bryan, 'Section 46: Legal and Economic Principles and Reasoning in Melway and Boral' (2001) 8 Competition & Consumer Law Journal 203; Robertson Wright and Michelle Painter, 'Recent Developments in the Application of s 46: Melway and Boral considered' (2001) 21 Australian Bar Review 105; Warren Pengilley, 'Misuse of Market Power: the High Court finds in favour of Melway and endorses the Realities of Exclusive Distribution' (2001) 17 Trade Practices Law Bulletin 1.
[211] Heerey J summarises the judge at first instance's findings: above n 209 (FFC), 130-33.
[212] Ibid 139-44.
[213] Ibid 134.
[214] Ibid 136.
[215] Ibid 135.
[216] Above n 209 (HCA), 265; but note Kirby J (dissenting) rejects this analysis (ibid 282-4).
[217] Ibid 268.
[218] Ibid.
[219] Above n 209 (FFC), 135.
[220] Ibid 134.
[221] Ibid 134.
[222] Ibid 135; Hanks and Williams, above n 149, which suggested 'taking advantage' had to be considered in the context of efficiency and that conduct engaged in irrespective of market power was a matter of efficiency and not mere use of any market power (ibid 445).
[223] Ibid 135-6.
[224] Ibid 136
[225] Ibid 135; Trade Practices Commission, Misuse of Market Power (1990) [17].
[226] Trade Practices Commission, ibid.
[227] Above n 209 (FFC), 136.
[228] Above n 209 (HCA), 268-69.
[229] Ibid 269.
[230] Ibid.
[231] United States Department of Justice and Federal Trade Commission, above n 165, Part IV(A).
[232] For example, see In re Summit Technology Inc and VISX Inc, No 9286, Federal Trade Commission, 21 August 1998.
[233] Above n 209 (HCA), 278.
[234] Ibid 273-4.
[235] Ibid 266-7.
[236] Ibid 268.
[237] Ibid 273-4.
[238] Ibid 285.
[239] Trade Practices Commission, above n 1, 8.
[240] Ibid.
[241] United States Department of Justice and Federal Trade Commission, above n 165, s 2.3.
[242] Above n 209 (HCA), 274.
[243] McCarthy, above n 4, 199.
[244] Intellectual Property and Competition Review Committee, above n 12, 138; see also Industrial Property Advisory Committee, above n 3, 24; National Competition Council, above n 12, 158.
[245] Organisation for Economic Co-operation and Development, above n 180, 15.
[246] Lawson, above n 38, 381-4.
[247] Lawson and Pickering, above n 39, 78-9.
[248] See the recent statement by the United States Patent and Trade Mark Office set out at n 40.
[249] Above n 41; see also Transkaryotic Therapies Inc, Annual Report 2000 (2001) 2:
I understand that many people have concluded TKT has lost its opportunity in the US. However, I believe that this view is far from reality. About half of all patent cases are reversed on appeal, and Amgen sells an erythropoietin product today only because they overturned a patent case on appeal. We are emblodened by the decision of the District Court because it correctly found that Amgen had neither described nor enabled TKT's technology and had not distinguished their recombinant erythropoietin from that of the prior art.
Contrast Amgen's view: 'The successful defence of our intellectual property was important, not only for Amgen but for our entire industry': Amgen Inc, Annual Report 2000 (2001) 5; a successful appeal against Amgen now seems an unlikely result following the High Court of Justice decision in England in Amgen Parties v Roche Parties, above n 41.
[250] Amgen Annual Report, ibid, 23.
[251] The same limitation would most probably apply in Australia as Amgen has patented extensive applications of the erythropoietin gene: see for examples, Kirin-Amgen Inc v Board of Regents of the University of Washington and Genetics Institute Inc [1995] 64 APO (19 October 1995).
[252] US Patent 6,245,566, Human embryonic germ cell line and methods of use, granted 12 June 2001; US Patent 6,200,806, Primate embryonic stem cells, granted 13 March 2001; Australian Patent 729377, Methods and materials for the growth of primate-derived primordial stem cells in feeder-free culture, granted 17 May 2001; US Patent 5,843,780, Primate embryonic stem cells, granted 12 January 1998; US Patent 5,061,620, Human haematopoietic stem cells, granted 29 October 1991.
[253] US Patent 5,159,135, Genetic engineering of cotton plants and lines, granted 7 December 1994.
[254] IP Australia, Industrial Property: IP Activity in Australia and the Asia Pacific Region (1998) 11 and Appendix B.
[255] Ibid 17 and Appendix B; significantly the same level of foreign grants was reported in 1984: Industrial Property Advisory Committee, above n 3, 11; attempting to quantify this, in 1998, 'of the 2000 or so patent applications filed in the biotechnology category, only around 2 per cent originate in Australia', which in real terms was an increase from 26 in 1988 to 46 in 1998: Dianne Nicol and Jane Nielsen, 'The Australian Medical Biotechnology Industry and Access to Intellectual Property: Issues for Patent Law Development' (2001) 23 Sydney Law Review 347, 361.
[256] Industry Commission, The Pharmaceutical Industry, Report 51, volume 1 (1996) 7; Australian Pharmaceutical Manufacturers Association, APMA Facts Book 1999-2000 (1999) 2.
[257] Industry Commission, ibid Chapter 6 (volume 1).
[258] Industrial Property Advisory Committee, above n 3, 17.
[259] For a recent listing of gene patent accumulations see Nell Boyce and Andy Coghlan, 'Your Genes in their Hands' (2000) New Scientist (20 May 2000) 15.
[260] For an example, the merger between Ciba-Geigy Limited and Sandoz Limited to form Novartis AG: see In re Ciba-Geigy Limited, above n 144;
Ciba and Sandoz are the two leading commercial developers of gene therapy products, which are expected to begin offering significant improvements in the treatment of cancer and other diseases and medical conditions by the year 2000. Working to ensure that the merger does not slow research and development or raise prices for gene therapy products closest to marketability, or slow innovation toward future products, the FTC proposed today to require, among other things, the licensing of specified gene therapy technology and patent rights to Rhône-Poulenc Rorer Inc. The goal, the FTC said, is to put Rhône-Poulenc in a position to compete against the combined firm, thereby resolving the agency's antitrust concerns
Federal Trade Commission, FTC Accord in Ciba-Giegy/Sandoz Merger to Prevent Slowdown in Gene Therapy Development and Preserve Competition in Corn Herbicides and Flea Control Markets, Press Release (17 December 1996).
[261] For an example, the merger between Glaxo Limited and Wellcome Limited to form Glaxo Wellcome Limited: In re Glaxo PLC, above n 170.
[262] See Suzanne Scotchmer and Jerry Green, 'Novelty and Disclosure in Patent Law' (1990) 21 RAND Journal of Economics 131; Intellectual Property and Competition Review Committee, above n 12, 138-39.
[263] Intellectual Property and Competition Review Committee, above n 12, 16-18 lists the recommendations.
[264] National Competition Council, above n 12, 1-14 summarises the recommendations.
[265] Ibid v; Industrial Property Advisory Committee, above n 3, 217.
[266] For an elegant summary of the 'traditional' and 'Chicago' views and the consequences for interpreting the benefits of intellectual property rights see McCarthy, above n 4, 209.
[267] See for example Intellectual Property and Competition Review Committee, above n 12, 150.
[268] Intellectual Property and Competition Review Committee, Report on Parallel Importing under the Copyright Act 1968 (2000) 3-13; although the view was not unanimous, see the dissenting opinion (38).
[269] Intellectual Property and Competition Review, Committee, above n 12, 150.
[270] Reviewed in Lawson, above n 38, 377-81; it is also significant that the United States does not draw this distinction: 'Whoever discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title': 35 USC 101; see the decision in Funk Brothers Seed Co v Kalo Inoculant Co, 333 US 127 (1948) which was criticised by the High Court in the NRDC case, above n 48, saying the terms 'work of nature' and 'laws of nature' were 'vague and malleable terms infected with too much ambiguity and equivocation' (263-4). The decision in Funk Brothers was an attempt by the court to limit a very broad claim for a very minor contribution to innovation.
[271] Reviewed in Lawson and Pickering, above n 39, 72-76.
[272] Which is well documented: see for example, Nicholas Gruen, Gerard Prior and Ian Bruse, Extending Patent Life: Is it in Australia's Economic Interests?, Industry Commission Staff Information Paper (1996) 16-40.
[273] Although the Intellectual Property and Competition Review Committee, above n 12, 143 quoted FM Sherer, New Perspectives on Economic Growth and Technological Innovation (1999) 58 who made a passing comment on this issue without a referenced source.
[274] Richard Levin, 'A New Look at the Patent System' (1986) 76 American Economic Review 199.
[275] See Charles Lawson, 'Some Economic Questions for Biotechnology Patenting in Australia' (2000) 41 Intellectual Property Forum 10, 14 for an analysis of the innovation deficit in the pharmaceutical industry.
[276] Pharmaceutical Research and Manufacturers of America cites 50 existing biotechnology medicines and a further 350 in development: Pharmaceutical Research and Manufacturers of America, Pharmaceutical Industry Profile 1999 (1999) 6.
[277] Australian Economic Analysis Pty Ltd, Pharmaceuticals and Australia's Knowledge Economy—A Report on Australia's Pharmaceutical Industry (1998) 1-6; although interestingly, intellectual property was not identified as a key issue for industry in a recent review of an industry/government dialogue in the United Kingdom: Pharmaceutical Industry Competitiveness Taskforce, Pharmaceutical Industry Competitiveness Taskforce—The Report (2001) 67.
[278] For example see Boyce and Coghlan, above n 259, 15, which illustrates the concentration of key gene patents among a few corporations.
[279] Prime Minister's Science Engineering and Innovation Council, Profiting from the Biotechnology Revolution (1998) 1.
[280] Industrial Property Advisory Committee, above n 3, 80.