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It is estimated that the human genome comprises between 20000 and 25000 genes.[1] By 2002, approximately 1000 of these genes were already subject to patent protection.[2] This figure is steadily rising as New Zealand and most other World Trade Organisation countries continue to permit the patenting of genes and genetic technology. However, the prudence of patenting genetic material is now in dispute. On the basis of the analysis conducted in this paper, it is submitted that New Zealand's present approach to gene patenting is flawed and in urgent need of reform. Although New Zealand's gene patents provide some societal and economic advantages by promoting innovation, gene patents are still considerably less beneficial than patents in general. Similarly, the costs that gene patents impose on society are unusually high. It is contended that New Zealand's current patent system fails to take into account the unique characteristics of genetic inventions and consequently affords gene patent holders rights which are too broad. Of particular concern is the fact that the excessive breadth of gene patents threatens to impede research and increase the cost of healthcare.[3] Although it is now widely accepted that New Zealand's patent law should be amended to address research and healthcare concerns, the task of drafting suitable amendments in light of the Agreement on Trade-Related Aspects of Intellectual Property Rights ('TRIPS') and other international pressures will be challenging.
This paper details the inadequacy of the current gene patenting framework and explores whether New Zealand can develop a TRIPS-compliant and internationally acceptable patent system which will encourage genetic innovation without unduly inhibiting some researchers or markedly increasing healthcare costs. To aid understanding, Part II clarifies the meaning of 'gene patents'. Part III then provides a broad overview of New Zealand's patent system and the patentability of genes. Part IV critiques the current patent system in relation to gene patents and demonstrates that, given the novel issues associated with genetic inventions, the law must be amended. Part V examines the policy boundaries which TRIPS and other international pressures will impose on any patent law reform. This is followed by an assessment of possible approaches which New Zealand may take to stem the potentially detrimental effects of gene patenting. While the genetic revolution is only just beginning, a cohesive and just approach to gene patenting must be adopted today to protect the future of genetics-based healthcare and research.
In the context of this paper, a 'gene patent' is a patent which asserts rights over any human gene or gene fragment or relates to methods used in genetic research and genetics-based healthcare. There are many different definitions of a gene. The most frequently cited definition states that a gene is a discrete segment of deoxyribonucleic acid ('DNA') which contains the information necessary for producing a particular protein or set of closely related proteins.[4] Proteins are macromolecules that perform most cellular functions. They serve as building blocks for cellular structures and form the enzymes that catalyse all of a cell's chemical reactions.[5] Thus, genes are often referred to as 'the building blocks of human life'.[6] Genes control human traits such as hair colour, blood type, susceptibility to disease and how individuals respond to drugs.[7] Genetic researchers have only recently begun to understand the complexities of the human genome. Although the vast majority of human genes have been identified, scientists are now faced with the daunting task of determining the role that each gene fulfils.[8] In the early 1970s, DNA was the most difficult cellular molecule for a biochemist to analyse. Today it is the easiest.[9] As a result of rapid technical innovation, genetic material can now be isolated, studied and manipulated in a manner that was inconceivable 35 years ago. This has resulted in a surge in genetic inventions over the past two decades. Gene patents now claim an extensive range of items including isolated human genes, expressed sequence tags[10] and mutant forms of genetic sequences.[11] Patented genetic inventions also serve a multitude of different functions. To provide only a few examples, these include the ability to diagnose genetic conditions, produce therapeutic proteins and to locate further genes.[12] The number of gene patent applications continues to climb as the level of biotechnological research rapidly increases.[13] In fact, humanity appears to be facing the dawn of a genetic revolution.[14] Recent experience indicates that genetic inventions will play an important role in medical practice and greatly enhance our understanding of the human body over the coming decades. For this reason, a timely consideration of the patentability of genetic developments is needed.
A patent is a statutory monopoly right which permits a patent owner to make, use or sell an invention within New Zealand for up to 20 years.[15] Patents are governed by the Patents Act 1953 ('the Act') and are available for inventions that are novel and sufficiently described. It should be noted that while an invention does not have to involve an inventive step or be useful in order to acquire patent protection, a patent must possess both of these characteristics if the risk of revocation is to be avoided. A patent can only be granted in relation to an invention. Section 2(1) of the Patents Act 1953 defines an invention as a 'manner of new manufacture' which would qualify for patent protection under 's 6 of the Statute of Monopolies'.[16] Section 6 of the Statute of Monopolies 1623 permits the granting of patents provided that they are not contrary to the law, mischievous to the state by raising prices of commodities at home or liable to hurt trade, or generally inconvenient.[17] Over the past four centuries, the courts have expanded the concept of 'manner of new manufacture' to encompass almost any new development outside the ambit of the s 6 proviso.[18]
Mere discoveries are not considered to be inventions and cannot be patented.[19] Discoveries are excluded from patent protection as they do not involve the application of ingenuity to produce a new and useful thing.[20] For example, it is not possible to patent a natural principle as this would be a claim to a law of nature, which has always existed. However, if the applicant could describe a method of utilising the principle so as to make it applicable to the production of a new manufacture, one could obtain a patent for the method.[21]
Before patent protection is granted, an invention will be examined for novelty. That is, whether or not the claimed invention is anticipated by prior publication or prior claiming.[22] In assessing patent applications, the New Zealand Intellectual Property Office (‘IPONZ') generally focuses on whether an invention is novel at a national level. For example, while overseas publications available in New Zealand will be relevant, worldwide novelty is not considered.[23] Second, the invention must be sufficiently described.[24] To successfully obtain a grant of letters patent an applicant must file a complete specification containing information such as a description of the invention and the scope of the invention claimed.[25] A specification must be worded in such a manner that a person of ordinary intelligence, conversant with the subject matter, will be able to understand and act on it.[26]
Although the Commissioner of Patents has the discretion to reject a patent application which is 'contrary to law or morality', this provision has rarely been applied.[27] If the patent criteria are met, a patent application may be accepted and advertised.[28] Within the prescribed time, any person interested may oppose the grant of a patent on the grounds listed in s 21 of the Patents Act 1953.[29] After a patent has been granted, it may be revoked by the High Court or the Commissioner of Patents pursuant to the provisions of the Act.[30] At present, there is no requirement under the Patents Act 1953 that an invention be useful or involve an inventive step in order to gain patent protection. Instead, inutility or lack of inventiveness are grounds upon which a patent may be revoked.[31] A patent will be 'useful' if, when the method described in the invention is used, the object or result that the patentee claims will be produced is in fact produced and this is useful.[32] A patent will not be sufficiently inventive if the invention claimed is obvious and does not involve an inventive step having regard to inventions previously published in New Zealand or with regard to what has been previously used in New Zealand.[33] Lack of inventiveness is also a ground on which a patent may be opposed.[34] However, due to the costs and uncertainty involved in revoking a patent or opposing its grant, relatively few patents are revoked or refused on the grounds of inutility or lack of inventiveness.[35]
When contemplating the patentability of a genetically engineered bacterium, an American judge, Burger CJ, famously proclaimed that 'anything under the sun that is made by man is eligible for patenting'.[36] Burger CJ's comment accurately reflects the approach currently adopted by IPONZ in assessing patent applications.[37] A gene patent can be acquired simply by meeting the standard patent criteria. To qualify as an invention rather than a mere discovery, genetic material must be isolated and purified. Once this is completed, a sufficiently described and novel gene or genetic sequence will qualify for patent protection. To date, New Zealand has granted many gene patents, mainly to overseas applicants.[38] Once a gene patent is granted, the patent owner and his or her agents or licensees have the sole right to make, use, exercise and vend the invention within New Zealand for the next 20 years.[39] A gene patent is only effective in relation to the relevant gene or genetic sequence in its isolated or purified form and does not give the patent holder exclusive rights over genetic material in its natural state. For example, a person whose body contains a patented gene or gene sequence will not infringe the patent and the patent owner will not have any rights over that person.[40] However, a gene patent will apply in relation to all uses to which the isolated and purified genetic material can be put, even though the patent application may have identified only one use.
It has been claimed that gene patents have led to a 'genomics gold rush' .[41] However, there is growing concern that gene patents are benefiting only a few while costing wider society dearly. As the number of gene patents continues to rise, it is necessary to focus attention on whether the benefits of the current gene patenting framework outweigh its costs. In order to effectively evaluate the present patent regime, it is necessary to understand the underlying rationale for granting patents.
It is generally accepted that patents are granted on the basis of a social contract between inventors and society.[42] Under this contract, inventors receive an exclusive right to commercially exploit their inventions over a term of twenty years. In consideration for this limited-term monopoly, inventors must disclose their inventions and the best method of carrying them out and allow public use of the inventions at the end of the patent term.[43] The patent system is designed to stimulate innovation. First, it promotes innovation by allowing individual inventors to recover research and development costs and profit from their technological advances. Second, it assists and encourages researchers in general by allowing them full access to the details of patented inventions. As innovations generally benefit society by providing better quality products or methods of production, it has historically been assumed that patent protection, as an incentive for innovation, is a valuable asset to society.[45] However, in light of recent experiences regarding gene patents, it appears that in some cases the patent system may potentially have a negative impact on societal welfare. Patents can be viewed as problematic as they impose the same economic and social costs as all other monopolies. Patents allow patent owners to charge higher prices for an invention than would be possible if other manufacturers could produce the invention in competition. A patent can also impose costs on society by inhibiting further research.[46] Researchers wishing to utilise a patented invention in their work may be forced to pay a licence fee to the patent owner. This added expense can potentially impede further innovation. Traditionally, it has been considered that the overall benefit of the patent system outweighs its societal and economic costs. However, the situation must now be reassessed in light of the novel issues raised by gene patenting.[47]
Concerns have been raised that New Zealand's patent law is out of date and is not coping with the advent of genetic inventions in a socially optimal way.[48] It is in the nation's interest to ensure that the patent system maintains its delicate balance between the interests of inventors who invest in new technology on the one hand, and the interests of society which should benefit from newly developed technology without major obstacles on the other.[49] It is contended that this balance is not being maintained. When the benefits of the current gene patent framework are weighed against the framework's costs, it is readily apparent that the current social contract is in dire need of revision.
The commonly cited benefits of patents are that they allow inventors to profit from their work and accord the community access to the exact details of patented inventions. However, it appears that gene patents provide considerably fewer benefits to New Zealand than the traditional social contract analysis assumes.
It is undeniable that gene patents allow scientists to charge monopoly prices and profit from their developments. The human erythropoietin gene patent is a striking example of the profitability of gene patents. As this gene can be used to produce a genetically engineered treatment for kidney disease, it is estimated to be worth in excess of $US1.5 billion a year.[50] However, as the vast majority of gene patents are owned by non-resident individuals and entities, the profitability of these patents has negative economic consequences for New Zealand.[51] As a net importer of genetic technology, New Zealand must pay inflated revenues to foreign inventors on the basis of gene patents issued in this country.
The fact that the vast majority of gene patents are held by foreigners also dilutes the second major benefit of the patent system. It is often claimed that patents benefit society by compelling inventors to publicly disclose new inventions which they would otherwise prefer to keep secret. Yet this advantage of patent protection is of little significance given that most gene patents in New Zealand are granted to non-residents who have also lodged patent applications overseas. If foreign patent applications are made, full details of the invention will be published by the relevant overseas patent offices. Therefore, New Zealand residents can freely obtain information regarding genetic technologies patented in foreign jurisdictions whether a New Zealand patent is granted or not.[52]
It is also concerning that while patents are granted to promote and reward innovation, many patented genetic inventions may not amount to genuine innovations. Innovations are typically considered to possess the characteristics of novelty, inventiveness and usefulness. However, under the Patents Act 1953 there is no need to establish that an invention is useful or involves an inventive step before a patent is granted. As a consequence, patents have been obtained for a large number of genes even though the patent owner has not demonstrated any particular use for them or established any inventiveness.[53] In truth, many patented genetic inventions may lack these qualities. Furthermore, even the genuine novelty of some patented genetic inventions may be regarded with suspicion. As soon as a gene is isolated and purified, IPONZ will consider it sufficiently novel to be patentable. Yet the process of isolation and purification is now a routine automated process which could be achieved by almost any skilled person with access to the necessary equipment.[54] As a result of the low threshold for novelty and the fact that usefulness and inventiveness do not need to be proven prior to the granting of a patent, gene patents may be obtained in relation to items that are not genuine innovations. This clearly reduces the benefits of the patent system envisaged under the social contract analysis. Gene patents may fail to augment scientific knowledge or assist other researchers in any material way and the benefits flowing from public disclosure of a genetic invention will often be minimal.
Gene patents do provide some advantages to New Zealand. The existence of a gene patenting system ensures that New Zealand organisations are viable candidates for private research funding.[55] If gene patents were not obtainable, private investors would be reluctant to provide genetic research funding as any inventions produced may be copied by competitors without repercussions. The unauthorised reproduction of a new genetic invention would then hinder the ability of the private investors to recoup their investment and profit from the invention. As New Zealand university research programmes and Crown Research Institutes alike are becoming increasingly reliant on private funding, the tendency of gene patenting to encourage investment is extremely beneficial to New Zealand. The ability of New Zealand researchers to obtain private funds must be protected if the number of locally owned gene patents is to be increased and the tide of gene patent profits flowing from New Zealand to overseas patent owners is to be curbed.
A further advantage of the current gene patenting process is that New Zealand's willingness to provide adequate protection for genetic inventions encourages other countries to provide similar protection for New Zealand inventions.[57] Similarly, overseas firms are probably more willing to allow their new inventions to be exploited in New Zealand as a result of the availability of gene patents.[58]
It is incontrovertible that gene patents provide a financial incentive for scientists to undertake research to discover genes. However, there is growing concern that such patents may simultaneously stifle subsequent research into the functions and possible practical applications of patented genes.[59] While all patents may hinder research to a certain degree, the stifling effects of gene patents are arguably considerably more severe. This is attributable to the fact that unlike most other kinds of patent, gene patents cannot be 'invented around'.
In most cases, if a patent restricts a researcher's ability to make use of a particular invention, it will be possible to build another invention which performs a similar function to the original but which does not infringe the patent. Unfortunately for those wishing to develop genetic technologies, it is extraordinarily difficult, if not impossible, to invent around a gene patent as there may be no alternatives to naturally occurring DNA sequences.[60] As a consequence, if a patent exists over a gene and its diagnostic use, any researcher wishing to investigate uses for the gene or develop an alternative diagnostic test may practically have no choice but to pay any licence fee demanded by the patent owner.[61] The licence fee charged may be excessive and there is also a risk that the patent owner may refuse to grant a licence at all. Even if a licence is obtained, if an improved diagnostic test is developed, or even an alternative use for the gene identified, the original patent holder may, depending on the scope of the patent, enjoy exclusive rights to use the gene for those purposes.[62] The existence of broad gene patents means that there is little financial incentive for anyone other than patent owners to develop improved tests or investigate additional applications for patented genetic material. Although an experimental use defence is available in actions for patent infringement, this limited exception to patent holders' rights offers little to alleviate the chilling effect of gene patents on research. The New Zealand courts have accepted that such a defence is available where an invention has been used in research without a licence, although it is only applicable in relation to bonafide experimentation that does not derive a commercial advantage.[63] The law is still uncertain as to where the line falls between pure research and research for gaining a commercial advantage.[64] However, given the currently perceived ambit of the defence, it seems that research conducted by non-profit organisations such as universities may not fall within the research exception if the research is later commercialised, or is carried out with the intention of developing a commercial product.[65] It is noteworthy that both Crown Research Institutes and universities are increasingly being required to seek commercial clients and produce marketable products.[66] Therefore, it may be concluded that while the experimental use exception will not assist any private sector researchers it is also unlikely to spare public sector researchers from having to negotiate licences with gene patent holders.
In addition to requiring researchers to obtain licences and possibly surrender ownership of newly developed gene technologies, gene patents also create practical and financial difficulties for researchers by slowing the rate at which scientific information is disseminated. Even if scientists negotiate the intellectual property rights needed to explore a patented gene, they may have considerable difficulty in accessing the relevant research findings of others. It has been predicted that gene patents will hinder the development of genetic technology as scientists will be less likely to share material if they are able to claim patent rights over genes and reap financial rewards.[67] A survey in the Journal of the American Medical Association supporting this conclusion found that one in every five medical scientists delayed publication of research results for at least half a year in order to protect financial interests.[68] The secrecy surrounding genetic inventions for which patent protection may be sought also increases the financial risk for all researchers working in the field. This risk arises as a biotechnology entity may do work to develop a genetic product only to find that new patents of which they were unaware have been granted during the course of the development. Depending on the patent owner's attitude to infringement, this may lead to unexpected licensing costs and possible infringement penalties.[69] Notwithstanding the risk of unforeseen financial costs, secrecy is also detrimental as researchers may needlessly duplicate research in order to discover a genetic sequence which one of their peers has already found and is in the process of quietly patenting.[70] Study of the human genome has the potential to produce significant advances in medicine and science. Yet the current patent system discourages research into the practical applications of genes and the development of more efficient genetic technologies.[71] Therefore, the system must be regarded as problematic.
To date the clinical applications of genomics have been very limited.[72] However, non-profit and profit institutions alike are presently devoting vast resources to the development of new healthcare technologies through genetic research.[73] As researchers develop new diagnostic tests and treatments for disease, many of these biomedical advances will undoubtedly become the subject of gene patents. There is growing concern that gene patents will increase medical costs, reduce the services that public healthcare systems can afford to provide and prevent some individuals from accessing new medical technologies.[74] In New Zealand these concerns only exist in relation to diagnostic tests, as most other methods of medical treatment are excluded from patentability.
In June 2004, the Court of Appeal unanimously affirmed that methods of medical treatment of humans are not patentable.[75] This exclusion from patentability is essentially a concession that the protection of life and health are overarching human objectives which transcend 'the sordid realm of proprietary rights' .[76] Although the exact legal basis on which this exclusion is applied has been the subject of some debate, IPONZ has consistently rejected patent claims to methods of medical treatment on the basis that they are 'contrary to law or morality' or 'generally inconvenient'.[77]
The precise ambit of the exclusion regarding methods of human medical treatment is presently unclear. Hammond J recently acknowledged that the term 'medical treatment' is somewhat loose, although it can usefully be broken down into diagnosis, therapy and surgery.[78] In Pharmaceutical Management Agency Ltd v Commissioner of Patents,[79] it was recognised that the exclusion is not absolute and that a number of medical treatments remain patentable. The medical treatment exclusion only applies to treatment or diagnosis on the human body and not to procedures undertaken exclusively outside the body.[80] As a consequence, diagnostic genetic tests performed on tissues that have been permanently removed from the body are not excluded from patentability.[81]
In relation to diagnostic tests, gene patents may have a detrimental effect on health services in two distinct ways. First, gene patents could potentially increase the cost of diagnostic tests beyond what many individuals and public healthcare systems can afford as they allow patent holders an excessive amount of market power. For example, although one individual may own 100 patents for different types of vacuum cleaner, he or she will still not be able to control the market for floor cleaning products as these patents may be invented around.[82] However, as discussed above, a gene patent which covers a gene and its diagnostic use may allow a patent owner to prevent competitors developing or using any alternative diagnostic test which utilises that particular gene. Consequently, gene patent holders will be able to charge extremely high prices for diagnostic testing services as there is no way that other suppliers can legally enter the market. Second, the monopoly position assured to gene patent owners may result in inferior quality tests being provided to consumers.[83] Patent holders can legally require test samples to be shipped to facilities of their choice for processing, regardless of the competence and efficiency of these facilities. Furthermore, diagnostic tests will not be improved upon unless the patent owner elects to conduct further research in this area or consents to someone else doing so. Arguably, the ability of genetic researchers to gain such a watertight monopoly over diagnostic technology far exceeds the terms of the social contract on which our patent regime is founded. The value of genetic diagnostic tests should not be underestimated. Genetic tests now allow certain diseases to be detected earlier than ever before and can lead to better prognostic outcomes for patients.[84] Similarly, individuals can opt to have a genetic test in order to ascertain whether they are a carrier of a disease, or if they have a predisposition to a particular illness. It may yet be too early to predict accurately the precise consequences of gene patenting for healthcare. Nevertheless, it is clear that the present patent system may limit access to diagnostic testing technology.
A series of patents owned by Myriad Genetics sharply illustrate the detrimental effects gene patents can have on research and healthcare costs. In 1994, an American biotechnology company, Myriad Genetics ('Myriad'), isolated the location of the genes BRCA1 and BRCA2. This discovery was made with assistance from the genealogical records of the Utah Mormons, the processing power of supercomputers and an investment of approximately $US9,000,000.[85] Determining the location of BRCA1 and BRCA2 was a significant achievement for Myriad, as mutations in these genes are indicative of a higher susceptibility to breast cancer.[86] Myriad subsequently obtained patent rights over the BRCA1 and BRCA2 gene sequences, various mutations of these genes, diagnostic tests for detecting mutations and methods for screening samples taken from tumours.[87] Myriad secured such patents not only in the United States but also in Europe, Canada, Australia, Japan and New Zealand.[88]
Following the acquisition of extremely broad patent rights over BRCA1 and BRCA2, Myriad began to require diagnostic tests for the presence of these genes to be carried out in its own laboratories in the United States or those of its exclusive licensees in other countries.[89] The cost of Myriad's breast cancer test is high at approximately $3850 (Can) per patient. Canadian doctors claim that they could perform their own genetic breast cancer testing for one-third of the price Myriad currently charges were it not for the patent.[90] In 2001, the Canadian province of British Colombia discontinued paying for genetic breast cancer testing because the healthcare system could not afford Myriad's testing fees.[91]
Myriad's patents became a contentious issue amongst New Zealand healthcare providers and researchers after Myriad licensed its BRCA1 patents to an Australian company, Genetic Technologies Ltd ('GTG'). In 2003, GTG approached a number of New Zealand organisations including District Health Boards and Crown Research Institutes seeking to enforce the BRCA1 patents.[92] Many of these organisations expressed concerns over the relatively high licence fees being charged and the excessive breadth of the patents. Some of the entities approached by GTG also questioned whether these patents in fact represented any novel information at the time of issue.[93] In November 2003, the health and life sciences sectors began discussions with GTG regarding their patents for BRCA1.[94] GTG has already demonstrated some flexibility regarding the assertion of its patent rights in Australia. For example, the company granted a reprieve to the Australian healthcare sector by announcing that it would not charge a licence fee for BRCA1 testing by public sector laboratories, nor would it require that all BRCA1 testing in Australia be conducted at the company's laboratories.[95] GTG has also rendered some assistance to public sector researchers. For instance, GTG has granted the University of Sydney the right to use GTG's patents in basic research for the remaining duration of the patents for a licence fee of only $1000 (Aust). GTG noted that this was several thousand-fold less than the licence fee sought from purely commercial entities.[96]
Although GTG has elected not to exercise some of its strict legal rights in relation to its breast cancer patents, the BRCA1 and BRCA2 patents poignantly illustrate why many are concerned about the effect of gene patents on research and healthcare. Canadian experience indicates that gene patents may inflate the cost of the latest medical technologies to levels beyond the financial means of many individuals and public healthcare systems. Yet to the chagrin of health professionals, Myriad's monopoly is assured since any independently developed diagnostic test for the breast cancer susceptibility gene BRCA1 will necessarily infringe Myriad's patents.[97]
The excessive breadth of the Myriad patents also threatens to stymie research in the field of breast cancer and beyond. At present, Myriad has rights over any use of BRCA1 and BRCA2.[98] There is evidence that these genes may be useful in the treatment and diagnosis of diseases other than breast cancer, such as ovarian cancer.[99] However, no researcher can explore this possibility without a licence from Myriad, even though Myriad has so far confined its use of the genes to breast cancer susceptibility tests. As indicated above, the licence fees charged by Myriad to commercial research entities can be very high and may even be prohibitively expensive.
The New Zealand patent system is said to reflect a social contract between inventors and the community. However, the benefits and costs associated with the grant of a gene patent are quite distinct from those flowing from patents in general and the social contract in relation to gene patents is now unfairly advantageous to inventors. In particular, the BRCA1 and BRCA2 patents have underscored the urgency with which New Zealand must address the issue of gene patenting. Following its experience with GTG, the Ministry of Health stated that it was 'concerned to limit the risk from such patents being granted or exercised in the future'.[100] It is apparent that New Zealand's patent system must be revised so that it may fairly accommodate genetic inventions. Whether this is possible must be determined in light of the international obligations and pressures which constrain New Zealand's actions.
Any patent law reform cannot be conducted without a thorough consideration of the provisions and effects of TRIPS. TRIPS came into force on 1 January 1995 and binds all 148 Members of the World Trade Organisation ('WTO'), including New Zealand.[101] This multilateral agreement is the most comprehensive international agreement on intellectual property protection ever established and has served to strengthen and harmonise the protection of intellectual property on a global scale.[102] TRIPS provides relatively high minimum standards for the protection and enforcement of several key categories of intellectual property rights. Standards for the protection of patents are set out in Articles 27-34 of TRIPS. TRIPS also incorporates national treatment and most-favoured-nation clauses to ensure non-discriminatory treatment amongst WTO Members.[103] Pursuant to Article 1(1), individual Members may elect to institute more extensive protection than required by TRIPS provided such protection does not contravene the provisions of the Agreement. Furthermore, TRIPS does not prescribe how its provisions are to be implemented, leaving Members free to determine the appropriate method of implementing TRIPS' requirements within their own legal system and practice.[104]
In order to comply with TRIPS, drastic modifications were made to New Zealand's patent law.[105] The Ministry of Economic Development ('MED') considers that New Zealand's patent legislation now satisfies TRIPS' requirements and has stated that any amendment to our patent system to address concerns over gene patenting must also be consistent with the Agreement.[106] While a state does not have to comply with TRIPS, there is considerable pressure to do so.
First, it must be emphasised that it is not possible to belong to the WTO without agreeing to accept TRIPS' obligations. With the exception of the agreements listed in Annex 4 of the WTO Agreement, a Member must accept all WTO agreements including TRIPS at the time of its accession to the WTO regime.[107] From this point, TRIPS' obligations may then be enforced against a Member as Article 64 of TRIPS states that disputes regarding intellectual property are subject to the WTO dispute settlement mechanism.
If a Member breaches any TRIPS obligation, other Members may bring a complaint which, if successful, will result in a recommendation being made that the offending state comply with TRIPS. Failure to implement such a recommendation within a reasonable time will result in the imposition of sanctions.[108] Sanctions take the form of either compensation or retaliation and are governed by Article 22 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ('DSU'). Compensation is a voluntary process whereby a non-compliant state, with the agreement of the complaining state, may make additional trade concessions beyond those required under their WTO commitments. Retaliation involves a complaining state suspending trade concessions so that the non-compliant state experiences harm equivalent to that caused by the non-compliant state's failure to comply with TRIPS. Retaliation can only be implemented with the consent of the Dispute Settlement Body. Critically, Article 22 also provides that both sanctions are temporary and neither is intended to be a substitute for implementing a recommendation or ruling to conform to the WTO agreements.[109] The overall effect of Article 22 of the DSU is that should a small state such as New Zealand deviate from its TRIPS obligations, it will most likely face heavy economic and political pressure to conform to the Agreement.
As a result of the pressure on Members to comply with TRIPS, most states have implemented the Agreement's requirements 'voluntarily' and the dispute settlement system has been used only infrequently in relation to TRIPS issues.[110] In addition to the dispute settlement mechanism, the observance of TRIPS' provisions is further encouraged by the Council for Trade-Related Aspects of Intellectual Property Rights ('TRIPS Council') which monitors the domestic laws of Members to determine whether they are meeting their TRIPS commitments.[111]
If the necessary gene patent law amendments are to be made, legislators must work around a TRIPS regime of unclear scope and effect. To date, national courts and commentators have differed considerably in their opinion regarding the effect of the provisions of TRIPS.[112] This divergence of opinion can be attributed to the manner in which the Agreement was drafted. During the Uruguay Round negotiations, there was widespread disagreement over the extent to which intellectual property rights were to be strengthened. In recognition of the contrasting views of negotiating parties, drafters intentionally kept some areas of TRIPS ambiguous and blurred concepts so that the Agreement might be acceptable to the different positions and interests at stake. In particular, 'constructive ambiguity' was employed as a method of last resort in relation to complex and controversial provisions such as Article 27 on patentable subject matter.[113] As a consequence, reference to the history of the Agreement's negotiation is unlikely to clarify the meaning of many of TRIPS' provisions to any great extent. Instead, information regarding the appropriate interpretation of TRIPS' provisions may be gleaned from other sources. First, WTO Panel and Appellate Body Reports may shed some light on how TRIPS is to be interpreted. Although TRIPS disputes have proved relatively uncommon, half of the TRIPS related disputes that have been filed with the Dispute Settlement Body have concerned patents. Second, the practices of WTO Members in implementing TRIPS may be influential in determining how TRIPS is to be understood. Third, the authoritative interpretations of TRIPS adopted by trade ministers at sessions of the ministerial conference will be highly relevant.[114] An interpretation of great significance is the Declaration on the TRIPS Agreement and Public Health adopted on 14 November 2001 at the WTO's Fourth Ministerial Conference in Doha, Qatar ('the Doha Declaration').
The Doha Declaration states that the TRIPS Agreement should be interpreted and implemented in a manner which supports public health and, in particular, promotes access to medicines for all.[115] The primary focus of the Doha Declaration is on the ability of poorer countries to access medicines to combat diseases such as AIDS/HIV, tuberculosis and malaria, yet the Declaration is likely to influence the interpretation of patent law in all health related matters. While the Declaration did not alter TRIPS' patent requirements, it affirmed that Members can make full use of any flexibility provided within TRIPS to meet public health concerns.[116] The Declaration may mean that a dispute regarding a gene patent measure aimed at improving access to healthcare will be approached with some leniency. Fourth, assistance in interpreting TRIPS' provisions can also be gleaned from the goals and limitations expressed in the Agreement itself.[117] The Articles most relevant when contemplating gene patent law reform are Articles 7 and 8(1). Article 7 provides:
The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. (emphasis added)
A strict limitation is imposed on measures aimed to promote health or public welfare in Article 8(1). This Article affirms that while Members may formulate or amend their laws to adopt measures to protect health and to promote the public interest in sectors of vital importance to their socio-economic and technological development, it also states that such measures must be consistent with the provisions of TRIPS. In spite of the various aids available to assist in the interpretation of TRIPS, there remains considerable uncertainty regarding the scope and effect of New Zealand's TRIPS obligations. This uncertainty may have the undesirable result of discouraging reforms to the gene patenting process as New Zealand legislators may be unwilling to risk an inadvertent contravention of TRIPS. However, the uncertainty can also be viewed as a great asset. TRIPS' status as an evolving document may allow the Agreement's provisions to be construed in light of changing social, scientific and economic concerns.
As the world's largest producer of biotechnology patents, the United States of America ('US') has an exceptionally keen interest in ensuring that genetic inventions receive strong patent protection.[119] As a major economic and political power, the US is able to exert considerable influence within the international community to ensure that stringent patent protection is implemented and upheld. It is widely recognised that the threat of US trade retaliation played a key role in securing acceptance of TRIPS. However, it is also apparent from US commentators that America does not perceive TRIPS as the final word on patent protection.[120] Since the introduction of TRIPS, the US has actively sought to enter bilateral agreements to strengthen patent laws to levels beyond those contemplated by TRIPS.[121] New Zealand is currently facing increased pressure to accept 'TRIPS-plus' obligations and this must be borne in mind when any patent law reform is considered.
Arup contends that it is conceivable that the US might threaten trade sanctions against a country that will not institute TRIPS-plus standards, including New Zealand.[122] Certainly, the United States Trade Representative ('USTR') has a history of diligently documenting New Zealand's intellectual property protection and identifying any perceived flaws within the intellectual property regime. These flaws have often become the subject of bilateral discussions between the US and New Zealand, with US pressure causing New Zealand to comply with US requests. For example, at the time TRIPS was introduced, urgent ad hoc amendments to New Zealand's patent law were already under way, in direct response to US pressure.[123]
Theoretically, the WTO agreements allow the WTO and its dispute settlement body to control the use of trade sanctions. The Appellate Body's decision in United States - Import Prohibition of Certain Shrimp and Shrimp Products[124] indicates that sanctions may not be applied unilaterally in order to pressure another country to alter its domestic policy.[125] However, a resourceful country can apply other forms of inducement or pressure to persuade other countries to adopt a policy.[126] New Zealand is especially open to inducement at present, as it is actively seeking to negotiate a free trade agreement with the US.
The US has the world's largest economy and purchased $NZ4.52 billon of New Zealand exports during the year ended March 2003.[127] If a free trade agreement is negotiated with the US, this figure will undoubtedly be much higher. Trade Negotiations Minister Jim Sutton recently stated that New Zealand places a high priority on opening bilateral negotiations with the US.[128] Should New Zealand be invited to enter trade negotiations with the US, New Zealand may find it difficult to refuse US demands to implement TRIPS-plus patent protection.[129] Due to the pressure to adopt TRIPS-plus levels of intellectual property protection it may be extremely difficult to pass legislation curtailing the scope of gene patent protection in this country.[130] Eventually, the cost of maintaining a patent regime ill-suited to New Zealand's interests may have to be weighed against the cost of losing a lucrative free trade deal.
The major benefit of the current gene patenting system is that it allows New Zealand firms to remain competitive in the global economy. Government and business leaders are likely to be very eager to ensure that any reformulation of the patent system does not result in this benefit being lost. Today, investment funds and goods and services flow across national borders more freely than ever before. This phenomenon, commonly referred to as globalisation, has locked nations in a state of vigorous competition. A nation's economic prosperity is now largely dependent on its ability to successfully compete for research and development funding and to produce market leading technology. The present gene patent framework serves to attract private investment in New Zealand biotechnology entities and increases the likelihood that foreign firms will allow their genetic inventions to be exploited within New Zealand industry. A desire to maintain New Zealand's economic competitiveness may cause legislators and industry participants to be very reluctant to narrow or limit gene patents.
It is submitted that gene patents are currently being issued on the basis of a social contract which heavily favours inventors at the expense of wider society. Patent law and practice must be revised so that the benefits of gene patents better equate to the costs which they impose. The Ministry of Economic Development has explicitly recognised these concerns and sought to address them in a draft Patents Bill ('the Bill') released on 20 December 2004.[131] While the Bill proposes a few amendments which will affect gene patents, there are numerous options for patent law reform which must be considered.
Those seeking to achieve a fair balance in gene patent law must determine whether reforms ought to be broad or specific in nature. Once the general approach to reform is selected, it is then necessary to review the viability of particular policy options. Two different types of policy could be introduced to alleviate the problems associated with gene patents. First, measures limiting the rights granted to gene patent holders could be implemented. Second, policies to make it more difficult or impossible to patent genetic inventions could be employed. Part VII of this paper reviews the general approach that reforms should take. The merits of specific kinds of policy reform are then assessed in Parts VIII and IX.
Gene patents have a particularly negative social impact as they possess characteristics and have effects that are not displayed by patents in general. Given the unique nature of gene patents, the most obvious way of curtailing their harmful features is to simply implement improved laws and practices to govern this type of patent. Unfortunately, amendments which specifically target gene patents are likely to contravene New Zealand's TRIPS obligations. Article 27(1) of TRIPS provides that patents shall be available for any inventions which are new, involve an inventive step and are capable of industrial application, and states that patent rights should be enjoyable without discrimination as to the field of technology. The exact ambit of this provision is unclear. Although Canada - Patent Protection[132] indicates that Article 27(1) does not place an absolute ban on patent measures which treat different fields of technology in varying ways, the scope for differential treatment seems to be slight.
Canada - Patent Protection supports the view that gene patents could potentially be singled out for special treatment, albeit only to a very limited extent. In considering the prohibition on discrimination by field of technology, the Panel held that a distinction must be drawn between 'discrimination' and 'differentiation', and that only the former will offend Article 27(1) of TRIPS.[133] The Panel explained that the concept of 'discrimination' goes beyond differential treatment and described the word 'discriminate' as 'a normative term, pejorative in connotation, referring to results of the unjustified imposition of differentially disadvantageous treatment' .[134] While it is uncertain exactly how much freedom this decision gives policy makers to implement laws aimed directly at gene patents, any such flexibility is likely to be minimal in practical terms. It is submitted that in spite of the unique problems associated with gene patents, any legal reform to deal with these issues must apply to patents in general and encompass all fields of technology. Article 27(1) of TRIPS currently allows very little scope for differential treatment between fields of technology. It is also unlikely that the WTO Panels or Appellate Body will adopt a more flexible interpretation of Article 27(1) in the foreseeable future, as the uniform nature of this provision has been heralded as the greatest economic achievement of TRIPS.[135] There would also be practical difficulties in confining patent law amendments to the field of gene patents. It would be extremely challenging to formulate a definition of 'gene patents' that encompasses the diverse range of inventions in this field without drawing in other types of invention as well. A process of piecemeal patent reform should also be discouraged as this will inevitably fragment and complicate the law. Instead, the entire patent framework should be amended so that it is sufficiently robust to deal equitably with gene patents and future technological innovations as well.
Non-resident individuals and entities own the vast majority of the gene patents granted in New Zealand. Consequently, if the patent framework was amended to diminish foreign patent holders' rights, the rights attached to most gene patents would also be diminished. Alternatively, if reforms hindered foreigners' ability to obtain patent protection, many future genetic inventions may not be patented in New Zealand. Amendments of this kind could reduce the scope of the monopoly held by most gene patent owners and possibly limit the negative impact of gene patents on research and healthcare costs.[136] However, an amendment which specifically targets foreign nationals would unquestionably breach TRIPS. Article 3 of the Agreement requires each WTO Member to accord to the nationals of other Member states treatment no less favourable than it accords its own nationals with regard to the protection of intellectual property. Similarly, Article 27(1) provides that patents must be made available and patent rights shall be enjoyable without discrimination as to the place of invention or whether the products have been imported or locally produced. Thus, any patent law reform must apply to both residents and non-residents alike.
If the patent term was reduced, the period over which gene patent holders could hinder research and charge monopoly prices for their inventions would also be shortened. Nevertheless, the social contract underlying patent law cannot be rebalanced in this way. The minimum permissible term of patent protection under Article 33 of TRIPS is 20 years. This minimum term of protection is not subject to exceptions or qualifications and has been readily upheld by the WTO.[137]
Notwithstanding TRIPS' requirements, a shorter patent term would also cripple research and development in New Zealand. Countries with a 20-year term will immediately become more appealing to investors as a longer patent term provides investors with a greater opportunity to profit from the fruits of research and development investment. In fact, a shorter term of patent protection may eliminate the potential to profit from genetic innovations altogether as the development and commercialisation of genetic products will often not be completed for many years after a patent has been granted.[138] It must also be recognised that if negotiations for a free trade deal do commence, New Zealand will probably face pressure from the US not only to maintain but actually increase the length of its patent protection. For example, Article 17.9.8 of the recently negotiated Australia-United States Free Trade Agreement has caused Australia to increase its patent term above 20 years in cases where there has been an unreasonable delay in the issuance of a patent.[139] A further difficulty in reducing New Zealand's patent term is that Article 27(1) of TRIPS would require the reduction to apply in relation to all fields of technology. This would upset the social contract between society and inventors who own patents other than gene patents, and would most likely be inappropriate and unfair to such inventors. Therefore, it is concluded that the term of patent protection should not be altered.
If the experimental use defence currently available in actions for patent infringement was extended, gene patents would obviously stifle research to a lesser degree. Article 28(1) of TRIPS states that a patent shall confer on its owner the exclusive right to prevent third parties from making, using, offering for sale, selling or importing the relevant invention without the owner's consent. However, the drafters of the Agreement recognised that the five exclusive rights contained in Article 28 would need certain adjustments.[140] Thus, Article 30 of TRIPS allows Members to provide
limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties.[141]
The exact scope of Article 30 is currently unclear. The Panel has held that Article 30 only permits narrow exceptions which effect a limited derogation of patent rights.[142] Article 27(1) non-discrimination principles also apply to Article 30 and any exception limited to one field of technology will not be 'limited' within Article 30.[143] Nevertheless, it is now widely accepted that a research exception to patent rights can be consistent with TRIPS.[144] It is recommended that New Zealand adopt an extended statutory experimental use exception as the current common law exception is deficient. It is important to recognise that a distinction can be drawn between allowing experimentation 'on' a patented invention and permitting the use 'of’ a patented invention in research. At present, the judicially developed experimental use exception definitely permits a person to conduct research on a patented item, provided they do not derive any commercial advantage.[145] Yet commentators are currently uncertain as to whether the exception also applies to unlicensed use of patented inventions in experiments.[146] It is submitted that a statutory exception should be enacted to clearly delineate the boundaries of the exception and to affirm that only experimentation or research on patented inventions will fall within the provision. That is, only research which aims to improve on a patented invention or explore its potential uses ought to be protected from claims of patent infringement. The exception should not cover the unlicensed use of a patented invention in research, as an exception of such breadth may destroy the value of patents over inventions designed primarily to be used as a research tool. This in turn would create a disincentive to develop such research aids. It is further submitted that the exception should be available in relation to all experimentation, including research that is commercially oriented. A statutory research exception which allows unlicensed research on a patented invention is entirely consistent with the underlying rationale of the patent system. The exception will promote innovation amongst the research community yet still protect patent holders' rights and financial interests by prohibiting commercial exploitation of infringing technology until the end of the patent term. It is noted that it may be difficult to determine when experimentation involving a patented genetic invention should be classified as experimentation 'on' an invention, rather than use 'of’ such an invention. However, it appears that the study of genetic material or technologies for the purpose of improving, further developing or testing them will come within the exception.[147] At present, research into genetic technologies is essentially locked up due to the requirement that research must be non-commercial in order to attract the protection of the common law exception. By including commercial and non-commercial research, a statutory exception can change this. An exception of the kind advocated above appears to be consistent with TRIPS.[148] This view is supported by the fact that an exception of this kind already operates in other WTO states, including the United Kingdom.[149]
There are strong factors supporting the implementation of a statutory exception as recommended by this paper. Today, gene patent holders can obtain a research monopoly which the 'basic patent deal' never intended to afford them. [150] Cooke P has also noted that patent law is being developed in an international environment where consistency of approach is important and that in relation to patent law, one should be wary of indigenous common law developments.[151] The time has come to implement a statutory research exception which will clarify the law and foster research in New Zealand.
Various countries are currently reviewing whether an increase in compulsory licensing can resolve many of the issues regarding gene patents.[152] The New Zealand compulsory licence system conforms to TRIPS' requirements and has the potential to at least partially overcome the problems associated with gene patents.[153] Section 46 of the Patents Act 1953 provides that a compulsory licence can be obtained in respect of a patented invention if the market for the patented invention is not being supplied or is not being supplied on reasonable terms.[154] The Act does not define 'reasonable terms'. Upon the grant of a compulsory licence, the licensee must pay the patent owner such remuneration as the parties agree, or in the absence of agreement, an amount stipulated by the court.[155] A compulsory licence will only be granted to an applicant who has taken all reasonable steps to obtain a licence and has been unable to obtain a licence or obtain one on reasonable terms.[156]
To date, no compulsory licences have been granted under s 46.[157] However, the compulsory licensing scheme may prove invaluable in reducing the costs which gene patents threaten to impose on the healthcare and research sectors. For example, if a gene patent holder such as Myriad Genetics attempts to sell their genetic inventions at prices far above what competitors can supply, a compulsory licence could be obtained to reduce the cost to consumers. The same is true in relation to genetic research tools not covered by the experimental use exception. Although no compulsory licences have been granted to date, the mere threat of an application under s 46 of the Patents Act 1953 may provide sufficient incentive for gene patent holders to negotiate reasonable terms regarding the licensing of their inventions.[158] To encourage the utilisation of the compulsory licensing regime it is recommended that comprehensive guidelines be developed detailing how these provisions are to be interpreted and applied. It is noteworthy that the Doha Declaration recently affirmed that provided they comply with TRIPS, each Member has the right to grant compulsory licences and to determine the grounds on which such licences are granted.[159] In addition to the compulsory licensing system, problems relating to patented genetic inventions can also be addressed through the Crown use provisions in the Patents Act 1953.[160] Where the availability of an invention is being unduly restricted to the detriment of the public, a government department or a person authorised by a government department may elect to make, use, exercise and vend any patented invention for the services of the Crown without infringing the patent.[161] In these circumstances, the Crown is obliged to pay the patent holder either the amount the parties have agreed, or if such an agreement cannot be reached, the amount ordered by the court.[162] Furthermore, a government department must have taken all reasonable steps to obtain the consent of the patent holder to use the patented invention on reasonable terms and have failed to obtain that consent within a reasonable period of time.[163] The Crown use provisions in the Patents Act 1953 have never been used but represent an important safety valve in New Zealand's patent system.[164] It is contended that these provisions should be retained in their current form.
If genetic material was excluded from patentability, the problems associated with gene patents would rapidly vanish. Such an exclusion could be effected by one of two routes.[165] First, the Patents Act 1953 could be amended so as to explicitly ban the patenting of genetic material. However, this option is likely to be inconsistent with Article 27(1) of TRIPS which decrees that patents shall be available for all inventions subject to the usual requirements of patentability. The second option would be to reclassify genetic material as a discovery rather than an invention.
While TRIPS provides that patents shall be available for all inventions, the Agreement does not define what an invention is. This omission reflects the fact that the international community does not currently agree on a unique conception of invention, and it is doubtful whether a suitable uniform definition could ever be devised.[166] The lack of a definition in TRIPS has allowed many developing countries to adopt a definition of invention that excludes genetic material. The WTO Member countries Brazil, Argentina, Bolivia, Colombia, Ecuador, Peru and Venezuela all classify genetic material, even in a purified and isolated form, to be a discovery rather than an invention.[167] The contention that genes or their component parts are discoveries is not untenable, as genes clearly fall between the commonly conceived notion of an invention and a discovery. Genes are naturally occurring substances and it seems strange that an isolated and purified product of nature should be an invention. As noted by Stenton, '[h]ow many people would think that the rock they pick up in the park becomes an invention of theirs after they have washed it and polished it?'[168]
The argument that genetic material should be classified as a discovery and not as an invention is an attractive point of view.[169] Furthermore, many commentators believe that adopting a definition of invention which effectively excludes gene patenting is legitimate within the bounds of TRIPS, although this assertion remains untested.[170] Nevertheless, it is submitted that New Zealand should not attempt to exclude genetic material from patentability by adopting a new statutory definition of invention. Although the legality of such an exclusion has not yet been tested under TRIPS, if the Patents Act 1953 was amended in this way a WTO Member may be motivated to bring a complaint alleging that the exclusion of genetic material from patentability is not consistent with TRIPS. This is because a New Zealand exclusion from patentability may inflict considerable economic damage on nations which produce genetic technology. Unlike the WTO countries which currently exclude genes from patentability, New Zealand has an advanced biotechnology industry capable of significantly exploiting genetic 'inventions' which are not subject to intellectual property protection.
Uncertainty regarding the legality of defining 'invention' in a manner which does not encompass genetic material is not the only reason why reform of this kind would be imprudent. Although excluding genetic material from patentability would remove all of the problems associated with gene patents, it would also eliminate all of their benefits. In particular, such an exclusion would render New Zealand's biotechnology industry hopelessly uncompetitive and extinguish the potential for genetic innovation in this country. Overseas inventors may also become unwilling to allow their inventions to be used in this country. Furthermore, practical problems in drafting a definition of 'genetic material' with an appropriate level of detail must be considered. It is concluded that the social contract underlying patents should not be reformed by excluding genetic material from patentability.
Article 27(1) of TRIPS forbids discrimination between fields of technology and provides that patents shall be available for any inventions. However, this provision does not introduce a uniform rule on patentability as it is subject to Articles 27(2) and 27(3) of the Agreement which specify exclusions from patentability that any Member can adopt. Given that patented genetic diagnostic tests can impose increased costs on the healthcare system, it is necessary to consider whether the methods of medical treatment exclusion should be widened to exclude such inventions from patentability. In New Zealand, the courts have determined that methods of medical treatment conducted on the human body are not patentable.[171] This is consistent with Article 27(3)(a) of TRIPS which allows Members to exclude from patentability diagnostic, therapeutic and surgical methods for the treatment of humans. The medical exclusion may soon have legislative force as the draft Patents Bill seeks to enact the words of Article 27(3)(a) of TRIPS.[172] Although the Bill intends to cement the existence of the medical exclusion in New Zealand law, there is no indication that it will change how the exclusion is interpreted. It is assumed that the exclusion will continue to apply only to treatment or diagnosis on the human body and that genetic diagnostic tests will remain patentable. The Ontario Report recommends that the methods of medical treatment exclusion be extended to cover the use of genetic diagnostic tests. The Report's authors consider that the current distinction between medical procedures carried out on the human body ('in vivo procedures') and procedures conducted outside the body ('in vitro procedures') is theoretical and practically difficult to maintain.[173] They propose the introduction of a new defence which would have the practical effect of widening the medical treatment exclusion. Under this approach, diagnostic technologies will remain patentable but clinicians who utilise such tests will have immunity against any claim of patent infringement.[174] While US law affords medical practitioners a patent infringement defence, it is confined to in vivo medical procedures and is therefore more limited than the Ontario Report's suggestion.[175]
It is presently unclear whether an infringement defence for medical practitioners in relation to patented diagnostic tests would comply with the requirements of TRIPS. No WTO country has implemented such a measure, and even the legitimacy of the US defence of lesser scope has been called into question.[176] Arguably, if it is permissible to exclude in vitro diagnostic tests from patentability, it must also be permissible to implement a defence cast in similar terms, particularly as a defence is less prejudicial to patent rights than an exclusion.[177] Yet it is currently uncertain whether the Article 27(3)(a) exclusion does in fact cover in vitro procedures. It is also arguable that if a WTO Member makes a patent available for an invention, TRIPS may oblige them to accord full patent rights to the patent holder.[178] As a consequence, the legality of the defence suggested by the Ontario Report is highly dubious. The suggested defence is also problematic in that it may be difficult to implement. The process of formulating a medical exclusion defence which only applies to the appropriate persons, organisations and inventions would undoubtedly be a challenging if not impossible task.
In contrast to the view expressed in the Ontario Report, the Nuffield Bioethics Council suggests that if suitable patent criteria exist and are applied stringently, patents over the genetic sequences used in diagnostic tests will be unlikely to be granted and there will be no need to establish an infringement defence for clinicians.[179] This argument appears to be sound. If genetic sequences were no longer subject to patent protection, concerns regarding genetic diagnostic tests may be extinguished. Multiple diagnostic tests could be developed by various inventors to detect the same gene or gene fragment. This could lead to increased competition in the diagnostic testing market, reduce costs to patients and increase access to healthcare. Given the dubious legality and implementation difficulties surrounding the Ontario Report's suggestion, the view of the Nuffield Bioethics Council must be preferred. The merits of altering the patent criteria are discussed below. It is clear that if the patent criteria are amended and stringently applied, an expansion of the medical exclusion from patentability is likely to be unnecessary.
Any WTO Member may elect to adopt an exclusion from patentability consistent with Article 27(2) of TRIPS. The MED considers that if the Patents Act 1953 were to incorporate the principles of Article 27(2), this exclusion may reduce public concerns about gene patenting.[180] However, it is doubtful whether the exclusion will significantly impact on the healthcare and research issues associated with gene patents. Article 27(2) allows a country to refuse a patent for an invention involving genes or parts of genes if it considers that the commercial exploitation of the invention must be prevented to protect ordre public or morality, including the protection of human life or health. It should be emphasised that pursuant to Article 27(2) of TRIPS, the right to refuse the grant of a patent is specifically linked to the immorality of the commercial exploitation of the invention. More general arguments about immorality will not be sufficient to justify invoking this exclusion.[181] European countries have chosen to explicitly include an ordre public and morality exclusion in their patent legislation.[182] The exception has been applied very narrowly and the Examination Guidelines of the European Patent Office ('EPO') indicate that it will only be invoked in 'rare and extreme cases'.[183] In fact, EPO decisions indicate that the morality provision will only be applied when an invention may be regarded as so abhorrent to the vast majority of the public as to render the granting of a patent inconceivable.[184] It has been suggested that the exclusion is very narrowly interpreted in Europe as patent examiners do not necessarily have expertise in ethical matters and are therefore uncomfortable in applying the clause.[185] The Australian Law Reform Commission ('ALRC') stated that European law provides an obvious model for an exclusion from patentability on the grounds of ordre public or morality but did not recommend that Australia enact such an exception. The Commission contended that the exclusion had proved too difficult to apply in Europe and has made no discernable impact on the granting of gene patents in those jurisdictions.[186] In spite of the reservations expressed by the ALRC, the draft Patents Bill proposes to introduce a public policy and morality exclusion.[187] Although the words 'public policy' rather than 'ordre public' appear in the Bill, it is assumed that this phrase will be interpreted in a manner consistent with New Zealand's TRIPS obligations and that the two phrases can therefore be taken to have a similar meaning in this context.[188] It is predicted that the introduction of the exclusion in the form suggested by the Bill would have very little impact on New Zealand's patent framework. The Commissioner of Patents will be charged with determining whether the exclusion ought to apply to a particular patent application.[189] Although the MED contends that IPONZ will consult widely to determine what constitutes public policy or morality, the risk remains that the exclusion will receive a narrow interpretation as has occurred in Europe.[190] Already, the MED has conceded that it is likely that few patent applications involving genetic material would be refused under this exclusion as many genes have already been patented and have been commercially exploited.[191] Nevertheless, it is recommended that an exclusion similar to that proposed by the Bill be enacted.
The concepts of ordre public and morality are inherently imprecise and WTO Members have considerable freedom to define these concepts according to their own conception of societal values.[192] Morality may be defined as the totality of the accepted norms which are deeply rooted in a particular culture.[193] Correa contends that the concept of ordre public may be interpreted to encompass the protection of the public interest and the physical integrity of individuals.[194] If the ordre public and morality exclusion was broadly interpreted, it could alleviate some of the concerns regarding healthcare and research. For example, the exclusion could apply to prevent the patenting of a genetic invention designed to cure a potentially fatal illness. However, such an invention would already be subject to the methods of medical treatment exclusion. In fact, it is arguable that the medical treatment exclusion and research exception will address healthcare and research issues at least as well and probably better than the ordre public or morality exclusion. Nevertheless, it is submitted that a broadly interpreted ordre public and morality exclusion may not be redundant and ought to be enacted. While research and healthcare issues are probably the leading concerns regarding gene patents today, this may not always to the case. An ordre public and morality exclusion could serve to alleviate any future concerns.
To avoid a narrow interpretation of the exclusion, a report by the Ontario government ('the Ontario Report') recommends that an ethics advisory body be established to deal with the social and ethical concerns regarding patents.[195] Such a body may be costly to maintain, but would be more confident and probably more liberal in interpreting the exclusion than patent office examiners. It is submitted that New Zealand should enact an ordre public or morality exclusion as suggested by the Bill but charge a specialist body rather than the Commissioner of Patents with its application. An amendment of this kind would create a greater scope for the refusal of gene patents which may be very harmful to the public interest. It appears that an exclusion implemented in this manner would be consistent with TRIPS and more versatile than the 'contrary to morality' provision currently found in s 17(1) of the Patents Act 1953. It is also unlikely that an exclusion of this kind will harm New Zealand's biotechnology industry in a material way as it will not apply to all gene patents, but only to those which truly threaten the public interest.
The greatest flaw in New Zealand's patent law is its patent criteria. The patent criteria are currently so lax that a patent can be obtained over something that is not truly new, that does not involve an inventive step and that may not be useful.[196] This runs contrary to the underlying rationale of the patent system which aims to foster, reward and protect genuine innovation. Individuals who have failed to make an innovative contribution to society are nevertheless obtaining patents which can impede research and increase healthcare costs. It is necessary to revise the patent criteria so that patents are only granted in relation to actual innovations. First, the threshold for establishing novelty must be raised so that only innovations are patented. At present, a local novelty standard is applied in assessing patent applications. Arguably, this approach is outdated given the modern level of international trade and access to information.[197] A worldwide novelty standard should be introduced so that public disclosure of an invention anywhere in the world will be considered by IPONZ in determining novelty.[198]
Second, a new patent criterion should be introduced requiring all patent applications to demonstrate an inventive step before they can be accepted. Currently, a patent may be revoked or opposed for lack of an inventive step given what has been previously known or used in New Zealand.[199] Yet due to the time and cost associated with the revocation and opposition processes, these provisions are rarely used. As a result, obvious items which do not constitute genuine innovations continue to receive patent protection. The introduction of an examination for obviousness is imperative as this will prevent the grant of patents over genetic material or applications of genetic material that are no more than obvious variations on what is already known.[200] For the reasons expressed in relation to the novelty requirement, any examination for an inventive step should also focus on the prior state of the art throughout the world, rather than the state of the art in New Zealand alone.
The third inadequate feature of the current patent system is that the usefulness of an invention is not examined prior to the granting of a patent.[201] Historically this has not been problematic as few rational people would go to the trouble and expense of patenting an invention of no known utility. However, the advent of genetic technologies has changed this. It often takes considerable time to develop a practical application for a gene but any application discovered may be extremely profitable. Hence, individuals now have a strong incentive to patent genetic material with no known use in order to prevent others from conducting research in the area. Gene patent holders can effectively lay claim to any uses of a gene, even before a single use is known. This can unfairly halt research and impede the development of genuine innovations. European nations and the United States have sought to prevent the patenting of inventions which lack utility by requiring patent applicants to show that their inventions have a credible, specific and substantial use before a patent is granted.[202] It is contended that New Zealand ought to do the same.
The proposed usefulness criteria could ensure that patents are only granted for real innovations which contribute to society. However, whether this occurs will depend on how the criteria are interpreted. It is submitted New Zealand should adopt an approach to interpretation similar to that used in the US. The US approach requires inventions to be of positive and practical benefit to society.[203] This is greatly preferable to the situation in Europe where commentators consider that the usefulness criteria may be satisfied if an invention can merely be 'made or used'.[204] If usefulness criteria are introduced, suitably interpreted and stringently applied, it is hoped that they will reduce the number and scope of gene patents issued.[205] For example, those who do no more than simply sequence a gene will be unlikely to be able to claim patent protection for that gene. A major advantage of the criteria is that while they may curb gene patenting, they will not impose a heavy burden on patent applicants in general, as usefulness will easily be demonstrated in relation to most kinds of inventions. All of the changes to the patent criteria canvassed above are contained in Part 1 of the draft Patents Bill. If enacted, these provisions will do little to hinder the patenting of inventions in general but, if interpreted in an appropriate manner, could create hurdles for those seeking to patent genetic material. The proposed changes appear to be consistent with TRIPS and will more closely align New Zealand's law with that of its major trading partners.[206] Most importantly, the new criteria will help to ensure that the patent system continues to fulfil its primary goal of encouraging innovation.
Today, the social contract underlying gene patents is unfairly advantageous to inventors and threatens to harm New Zealand's research and healthcare sectors. The patent framework must be remodelled so that it can fairly deal with all types of invention. Any reform must take into account TRIPS' provisions, international pressure to adopt TRIPS-plus obligations and New Zealand's other economic concerns. It is contended that the negative impact of gene patents could be reduced if an extended experimental use exception and an ordre public and morality defence was implemented, if the utilisation of compulsory licensing and Crown use provisions was encouraged and if the patent criteria were improved. The draft Patents Bill represents a wonderful opportunity to introduce many of these measures.[207] Yet even if all of the recommended changes were enacted, it is almost certain that concerns regarding gene patents will persist. There is no perfect solution to the problems surrounding genetic inventions and new gene patent issues will undoubtedly arise as genetic technology evolves. Nevertheless, legislators must act today to ensure that the patent system is as ready as possible to equitably accommodate all future genetic inventions, whatever these may be.
[*] LLB(Hons), BCom, Law Clerk, Chapman Tripp. The views expressed in this article are the author's own and do not necessarily reflect those of Chapman Tripp or its clients.
[1] Human Genome Project, How Many Genes Are in the Human Genome? (2004) <http://www.ornl.gov/sci/techresources/Human_Genome/faq/genenumber.shtml> at 14 December 2004.
[2] Anna Harrington, 'Gene Patents Stifle Basic Research: An Economic Analysis' [2002] Harvard Health Policy Review 62.
[3] Ministry of Economic Development and Ministry of Health, Memorandum to Cabinet Policy Committee: Report Back with Recommendations and Options for Addressing Genetic Material Patents (2004) 16 <www.med.govt.nz/buslt/int_prop/genetic-material/cabinet/memo/index.html> at 1 December 2004.
[4] Bruce Alberts et al, Molecular Biology of the Cell (4th ed, 2002) 200.
[5] Ibid 191.
[6] Ontario Report to Premiers - Genetics, Testing & Gene Patenting: Charting New Territory in Health Care (2002) 13 <htttp://www.health.gov.on.ca/english/public/pub/ministry_reports/geneticsrep02/report_e.pdf> at 1 December 2004.
[7] Allen Nunnally, 'Commercialized Genetic Testing: the Role of Corporate Biotechnology in the New Genetic Age' (2002) 8 Boston University Journal of Science and Technology Law 306, 310.
[8] Human Genome Project, above n 1.
[9] Alberts et al, above n 4, 491.
[10] Expressed sequence tags are short fragments of DNA.
[11] Australian Law Reform Commission, Genes and Ingenuity - Gene Patenting and Human, Report No 99 (2004) [6.3].
[12] Andrew Allen, 'Biotechnology, Research and Intellectual Property Law' [2002] CanterLawRw 5; (2002) 8 Canterbury Law Review 365, 376.
[13] Timothy Caulfield, 'Sustainability and the Balancing of the Health Care and Innovation Agendas: The Commercialization of Genetic Research' (2003) 66 Saskatchewan Law Review 629, 631.
[14] Ibid.
[15] Patents Act 1953, s 30(3). Note that pursuant to s 30(4) of the Patents Act 1953 and the Patents Regulations 1954, renewals fees must be paid at the end of the fourth, seventh, tenth and thirteenth years of the patent term.
[16] Section 2(1) of the Patents Act 1953 defines 'invention' to mean 'any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies and any new method or process of testing applicable to the improvement or control of manufacture; and includes an alleged invention.'
[17] The Statute of Monopolies 1623 (UK) outlawed monopolies in general but allowed patents to be granted. Section 6 provides (in modern English) 'that any declaration before mentioned shall not extend to letters-patent and grants of privilege ... hereafter to be made, of the sole working or making of any manner of new manufactures within this realm, to the true and first inventor and inventors of such manufactures, which other at the time of making such letters-patent or grant, shall not use, so as also they be not contrary to the law, nor mischievous to the state, by raising prices of commodities at home, or hurt of trade, or generally inconvenient.'
Despite contrary comments made in Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 535, the New Zealand Court of Appeal recently held that the definition of invention continues to incorporate the full text of s 6 of the Statute of Monopolies. See Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [58]).
[18] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [3]); Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 536-538.
[19] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [103]).
[20] Lane Fox v Kensington and Knightsbridge Electric Lighting Co (1892) 9 RPC 413, 416.
[21] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [104]).
[22] See ss 13 and 14 of the Patents Act 1953; Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 533.
[23] See s 13 of the Patents Act 1953; Susy Frankel & Geoff McLay, Intellectual Property in New Zealand (2002) 345.
[24] Section 9(1) of the Patents Act 1953 provides that every application for a patent (other than a convention application) shall be accompanied by either a complete specification or a provisional specification. Every convention application shall be accompanied by a complete specification.
[25] The requirements for a complete specification are set out in s 10 of the Patents Act 1953. Where a provisional specification is filed, a complete specification must be filed at a later time in accordance with s 9(2) of the Patents Act 1953.
[26] Daily v Lightband [1903] NZGazLawRp 145; (1903) 6 GLR 135, 136.
[27] Sees 17(1) of the Patents Act 1953; Ministry of Economic Development, Review of the Patents Act 1953: Boundaries to Patentability, (2002) [55] <http://www.med.govt.nz/buslt/int_prop/patentsreview/discussion/patentsreview.pdf> at 1 December 2004.
[28] Patents Act 1953, s 20.
[29] It has been held that 'any interested person' means an individual with a genuine commercial interest so that there is a likelihood that he or she will suffer real prejudice by the existence of the patent: Re Glaverbel's Patent [1987] RPC 73.
[30] Patents Act 1953, ss 41, 42.
[31] Patents Act 1953, s 41(f), (g).
[32] Smale v North Sails Ltd [1991] 3 NZLR 19,51-53.
[33] Patents Act 1953, ss 21(1)(e), 41(1)(f).
[34] Patents Act 1953, s 2(e).
[35] Ministry of Economic Development, above n 27, [23].
[36] Diamond v Chakrabarty, [1980] USSC 119; 447 US 303, 309 (1980).
[37] Intellectual Property Policy Group Regulatory and Competition Policy Branch, Patent Protection in New Zealand <http://www.med.govt.nz.buslt/int_prop/info-sheets/patent-prot.html> at 1 December 2004.
[38] Ministry of Economic Development and Ministry of Health, Implications of the Granting of Patents over Genetic Material (2003) 16 <http://www.med.govt.nz/buslt/int_prop/genetic-material/cabinet/implications/index.html> at 1 December 2004.
[39] Patents Regulations 1954, Third Schedule.
[40] Ministry of Economic Development, above n 27, [140].
[41] Gavin Stenton, 'Biopiracy within the Pharmaceutical Industry: AStark Illustration of how Abusive, Manipulative and Perverse the Patenting Process can be towards the Countries of the South' [2004] European Intellectual Property Review 17, 19.
[42] Allen, above n 12, 373.
[43] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 532.
[44] Nuffield Council on Bioethics, The Ethics of Patenting DNA (2002) [2.3] <www.nuffieldbioethics.org/fileLibrary/pdf/theethicsofpatentingdna.pdf> at 1 December 2004.
[45] Harrington, above n 2, 62.
[46] Rob Aerts, 'The Industrial Applicability and Utility Requirements for the Patenting of Genomic Inventions: A Comparison Between European and US Law' [2004] European Intellectual Property Review 349, 359.
[47] It is acknowledged that some of the issues raised by gene patenting are not novel in that they have also been raised in relation to drug patenting. However, the concerns regarding pharmaceuticals do not perfectly mirror those associated with genetic inventions. Thus, the combination of issues raised by gene patents may be considered novel. See Lori Andrews, 'The Gene Patenting Dilemma: Balancing Commercial Incentives with Health Needs' (2002) 65 Houston Journal of Health Law and Policy 65, 77.
[48] Aerts, above n 46, 359.
[49] Ibid.
[50] Andrews, above n 47, 66.
[51] Stenton, above n 41, 19; Ministry of Economic Development, above n 27, [14].
[52] Ministry of Economic Development, above n 27, [14].
[53] Ministry of Economic Development, Review of the Patents Act 1953 Stage 3: Part 2: Regulatory Impact Statement (2003) <http://www.med.govt.nz/buslt.int_prop/patentsreview/ris/part2/index.html> at 2 December 2004.
[54] Ministry of Economic Development, above n 27, [138].
[55] Anthony D'Amato & Doris Long (eds), International Intellectual Property Law (1997) 269.
[56] Allen, above n 12, 367.
[57] Ministry of Economic Development, above n 27, [13]. However, note that countries which belong to the World Trade Organisation are required by Article 27(1) of TRIPS to make patents and patent rights available without discrimination as to the place of invention.
[58] Ministry of Economic Development, above n 27, [13].
[59] Harrington, above n 2, 62.
[60] Nuffield Council on Bioethics, above n 44, [5.13].
[61] Pursuant to s 46 of the Patents Act 1953 any interested person can apply for a compulsory licence to exploit a patented invention if the market for the patented invention is not being supplied or is not being supplied on reasonable terms. However, any researcher making an application for such a licence will undoubtedly incur legal fees and may be discouraged by the uncertainty which currently surrounds the operation of s 46. The application process will also delay research. Compulsory licensing is discussed in more detail in Part VIII of this paper.
[62] Ontario Report, above n 6, 41.
[63] Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560, 566.
[64] In Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560, 566 Hardie Boys J stated the 'experimentation will usually have an ultimate commercial objective; where it ends and infringement begins must often be a matter of degree. If the person concerned keeps his activities to himself, and does no more than further his own knowledge or skill, even though commercial advantage may be his final goal, he does not infringe. But if he goes beyond that, and uses the invention or makes it available to others, in a way that serves to advance him in the actual market place, then he infringes, for the market place is the sole preserve of the patentee'.
[65] Ministry of Economic Development and Ministry of Health, above n 3, 9.
[66] Allen, above n 12, 367.
[67] Andrews, above n 47, 79.
[68] Ibid 80.
[69] Ontario Report, above n 6, 42.
[70] Andrews, above n 47, 90.
[71] The possible stifling effects of gene patents on research was highlighted in a 1998 study by Mildred Cho at Stanford University in the United States. This study found that 25% of US university and commercial laboratories surveyed 'refrained from providing genetic tests, or continuing carrying on with related research due to fears of patent infringement or insufficient funding to pay the required royalty or licence fees'. See Ontario Report, above n 6, 42 .
[72] World Health Organisation Advisory Committee on Health Research, Genomics and World Health: Summary (2002) 10 <http://www.3.who.int/whosis/genomics/pdf/genomics00.pdf> at 2 December 2004.
[73] Caulfield, above n 13, 631.
[74] Nuffield Council on Bioethics, above n 44, [1.9].
[75] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [7]).
[76] Ibid [116].
[77] Ministry of Economic Development, above n 27, [213]. See also Patents Act 1953, ss 7, 17.
[78] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [111]).
[79] [1999] NZCA 330; [2000] 2 NZLR 529.
[80] Australian Law Reform Commission, above n 11, [7.34].
[81] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 537.
[82] Frankel & McLay, above n 23, 324.
[83] Andrews, above n 47, 89.
[84] Ontario Report, above n 6, 4.
[85] Matthew Rimmer, 'Myriad Genetics: Patent Law and Genetic Testing' (2003) European Intellectual Property Review 20.
[86] It is estimated that 60-85% of women with a BRCA1 mutation will develop breast cancer during their lifetime. See Australian Law Reform Commission, Essentially Yours - The Protection of Human Genetic Information in Australia, Report No 96 (2003) [2.25].
[87] See Nuffield Council on Bioethics, above n 44, [4.3]; Rimmer, above n 85, 22.
[88] Rimmer, above n 85, 23. For example see New Zealand patent number 333635 for 'BRCA1 compositions and methods of the diagnosis and treatment of breast cancer'. Although Myriad was granted a patent relating to a 'method of diagnosing a predisposition for breast and ovarian cancer' by the European Patent Office in 2001, this patent was revoked in May 2004 on the grounds that it lacked an inventive step. See European Patent Office, 'Myriad/breast cancer' patent revoked after public hearing (2004) <http://www.european-patent-office.org/news/pressrel/2004_05_18_e.htm> at 4 January 2005.
[89] Australian Law Reform Commission, above n11, [20.30].
[90] Andrews, above n 47, 91.
[91] Ibid.
[92] Ministry of Economic Development and Ministry of Health, above n 38, 3.
[93] Ibid.
[94] Ibid 7.
[95] Australian Law Reform Commission, above n 11, 12.
[96] Ibid [12.44].
[97] Nuffield Council on Bioethics, above n 44, [5.4].
[98] Ibid [5.23].
[99] Ministry of Economic Development and Ministry of Health, above n 38, 2.
[100] Ibid 7.
[101] The WTO has 148 members as at 13 October 2004.
[102] Nuno Pires de Carvalho, The TRIPS Regime of Patent Rights (2002) 24.
[103] TRIPS, Articles 3-4.
[104] TRIPS, Article 1(1).
[105] These modifications were implemented through the enactment of the Medicines Amendment Act 1990, the Patents Amendment Act 1992 and the Patents Amendment Act 1994. See Astrid Baker, 'GATT, TRIPS, the revision of New Zealand's Patent Legislation and Pharmaceuticals' (1997) New Zealand Intellectual Property Law Journal 245.
[106] Ministry of Economic Development, above n 27, [51].
[107] Marrakesh Agreement Establishing the World Trade Organisation (the WTO Agreement), Article 2(2).
[108] Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2 to WTO Agreement, Article 22(1).
[109] DSU, Article 22(1).
[110] Christopher Arup, 'TRIPS: Across the Global Field of Intellectual Property' (2004) European Intellectual Property Review 7. Note that Article 64(2) of TRIPS places a moratorium on non-violation complaints which is due to expire in July 2005.
[111] TRIPS, Article 68.
[112] Aerts, above n 46, 357.
[113] Daniel Gervais, The TRIPS Agreement - Drafting History and Analysis (2nd ed, 2003) 70.
[114] Article 9(2) WTO Agreement allows authoritative interpretations of TRIPS to be adopted.
[115] WTO, Ministerial Conference, Fourth Session, Doha, 9-14 November 2001, Ministerial Declaration, WT/MIN(01)DEC/W/1, 20 November 2001, [4].
[116] Ibid.
[117] Panel Report, Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R, [7.26].
[118] Ministry of Economic Development and Ministry of Health, above n 3, 7.
[119] Between 1990 and 1995, 37% of all biotechnology patents originated from the US. See Stenton, above n 41, 17.
[120] Michelle McGrath, 'The Patent Provisions in TRIPS: Protecting Reasonable Remuneration for Services Rendered - or the Latest Development in Western Colonialism?' (1996) European Intellectual Property Review 398, 403; Michael Blakeney, Trade Related Aspects of Intellectual Property: A Concise Guide to the TRIPS Agreement (1996) 7.
[121] McGrath, above n 120, 403.
[122] Arup, above n 110, 9.
[123] Baker, above n 105, 246. More recently, US representatives expressed concerns that trademark violations were not a criminal offence in New Zealand. The Trade Marks Act 2002 was promptly amended and certain infringements became a criminal offence punishable by up to five years imprisonment. See Office of the United States Trade Representative, Foreign Trade Barriers, (2002) 281 <http://www.ustr.gov/assets/Document_Library/Reports_Publications/2003/2003_NTE_Report/asset_upload_file709_6211.pdf> at 11 December 2004.
[124] Appellate Body Report, United States — Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, 12 October 1998.
[125] Arup, above n 110, 9.
[126] Ibid.
[127] New Zealand Trade and Enterprise, New Zealand's Exports March 2003 (2003) [1.3] <http://www.nzte.govt.nz/common/files/nzexports_mar2003.pdf> at 11 December 2004.
[128] New Zealand Government, New Zealand Welcomes A-US FTA Law Passing (2004) <http://www.Beehive.govt.nz> at 23 December 2004.
[129] This could lead to an overall increase in New Zealand's intellectual property protection as Article 4 of TRIPS requires that any advantage granted to the nationals of one WTO country must be accorded immediately and unconditionally to the nationals of all other Members.
[130] It should be noted that other nations, including many European states, also wish to encourage the adoption of TRIPS-plus obligations. See Arup, above n 110, 9.
[131] Ministry of Economic Development and Ministry of Health, above n 3.
[132] Panel Report, Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R.
[133] Ibid [7.94].
[134] Ibid.
[135] Joseph Straus, 'Implications of the TRIPS Agreement in the Field of Patent Law' in Friedrich-KarlBeier & Gerhard Schricker (eds), From GATT to TRIPS-The Agreement on Trade-Related Aspects of Intellectual Property Rights (1996) 160, 180.
[136] It is acknowledged that gene patents held by New Zealand nationals could still adversely affect research and healthcare.
[137] The Panel and the Appellate Body upheld a United States' complaint regarding Canada's failure to extend the 17-year term of patents granted before 1989 to 20 years. See Canada - Term of Patent Protection, Reports of the Panel and the Appellate Body adopted on October 12, 2000 (WT/DS170R of May 5, 2000 and WT/DA170/AB/R, of September 18, 2000).
[138] Australian Law Reform Commission, above n 11, [5.15].
[139] Australia and United States, Australia-United States Free Trade Agreement, 18 May 2004 <http://www.dfat.gov.au/trade/negotiations/us_fta/final/text/> at 3 January 2004.
[140] Panel Report, Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R [7.26].
[141] Canada — Patent Protection indicates that the term 'legitimate interests' will be construed as a concept broader than legal interests, although the true scope of this term is currently unknown. See Panel Report, Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R [7.68]-[7.71].
[142] Ibid [7.30].
[143] Ibid [7.92].
[144] In Canada — Patent Protection, Canada and the European Communities accepted that experimental use exceptions may be designed so that they fall within the ambit of TRIPS' provisions and noted that such exceptions are common among WTO Members. See Panel Report, Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R, 56.
[145] Monsanto Company v Stauffer Chemical Company (NA) [1984] FSR 559, 567.
[146] There is conflicting opinion on this issue. See Allen, above n 12, 378; LexisNexis Publications, The Laws of New Zealand, Patents and Inventions Volume I - Infringement -72. Experimentation.
[147] Australian Law Reform Commission, above n 11, [13.86].
[148] The Australian Law Reform Commission has noted that while the precise ambit of TRIPS' provisions is unclear, the enactment of an experimental use exception, covering acts done for experimental purposes relating to the subject matter of the patented invention, is unlikely to conflict with the TRIPS Agreement. See Australian Law Reform Commission, above n 11, [13.72].
[149] See Patents Act 1977 (UK), s 60(5).
[150] Canada: Patent Protection of Pharmaceutical Products: Complaints by the European Communities and their Member States, 17 March 2000, WT/DS114/R, 56.
[151] Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560, 563.
[152] Ministry of Economic Development and Ministry of Health, above n 3, [48].
[153] Section 54(3) of the Patents Act 1953 requires that the grant of any compulsory licence must be consistent with TRIPS. All WTO Members must follow the procedure specified in Article 31 TRIPS in granting a compulsory licence. In summary, the requirements of Article 31 TRIPS for granting a compulsory licence are: (a) that the compulsory licence application be assessed on its individual merits; (b) the compulsory licence applicant must have attempted to obtain the consent of the patent holder on reasonable commercial terms and conditions and that such effort must have been unsuccessful within a reasonable period of time; (c) the scope and duration of the compulsory licence must be limited to the purpose for which it was granted; (d) the compulsory licence shall not be exclusive; (e) the compulsory licence shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f) use on the basis of a compulsory licence shall be authorised predominantly for the supply of the domestic market of the Member authorising such use; (g) if and as soon as the circumstances that led to the compulsory licence no longer exist and are not likely to recur, the licence must be terminated, in such cases however the Members must provide for adequate protection of the legitimate interests of the party that was entitled to the compulsory licence; (h) the patent holder shall be paid adequate remuneration in the circumstances of the case, taking into account the economic value of the authorisation; (i) the legal validity of the grant of a compulsory licence shall be subject to judicial review or other independent review by a distinct higher authority in that Member; (j) the decision on the remuneration payable in respect of the compulsory licence shall be subject to judicial review or other independent review by a distinct higher authority in that Member; (k) Members are not obliged to apply the conditions in (b) and (f) where a compulsory licence is granted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases.
[154] Section 46 of the Patents Act 1953 provides that a compulsory licence can be applied for any time after the expiration of 3 years from the date of the sealing of the patent or 4 years from the date of the patent, whichever is the later. Pursuant to s 46(4) a compulsory licence is not exclusive, may not be assigned otherwise than in connection with the goodwill of the business in which the patented invention is used and is limited to the supply of the patented invention predominantly in New Zealand.
[155] Patents Act 1953, s 46(6).
[156] Patents Act 1953, s 46(7).
[157] Ministry of Economic Development and Ministry of Health, above n 3, [46].
[158] It is possible that GTG's recent willingness to negotiate a reduction in diagnostic testing fees is an example of the deterrent effect of compulsory licensing provisions.
[159] WTO, Ministerial Conference, Fourth Session, Doha, 9-14 November 2001, Ministerial Declaration, WT/MIN(01)DEC/W/1, 20 November 2001, [5(b)].
[160] TRIPS' conditions regarding Crown use of patented inventions are contained in Article 31 and are almost identical to the conditions which govern the grant of compulsory licences. However, Article 31(b) TRIPS allows Crown use without efforts being made to obtain prior authorization from the patent holder.
[161] Patents Act 1953, s 55(1).
[162] Patents Act 1953, s 58C.
[163] Patents Act 1953, s 58A.
[164] Ministry of Economic Development and Ministry of Health, above n 3, [46].
[165] Ibid [32].
[166] Carlos Correa, Intellectual Property Rights, the WTO and Developing Countries (2000) 51.
[167] See Brazilian Patent Law Article 10.IX, Law 9279; Argentinean Patent Law Article 6(g); Decision 486 of the Andean Group Article 15(b).
[168] Stenton, above n 41, 20.
[169] Australian Law Reform Commission, above n 11, [6.51].
[170] Correa, above n 166, 54.
[171] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [7]).
[172] Patents Bill (Draft), cl 15(2).
[173] Ontario Report, above n 6, 51.
[174] Ibid. The Ontario Report contends that liability protection should extend to physicians, nurses, pharmacists, health technicians and other healthcare practitioners, as well as their medical facilities.
[175] Pallin v Singer, 36 USPQ. 2d 1050 (1995).
[176] The European Communities and their member States asked the United States to explain how its medical defence complies with TRIPS. See World Trade Organisation, Review of Legislation in the Fields of Patents, Layout-designs (Topographies) of Integrated Circuits, Protection of Undisclosed Information and Control of Anti-Competitive Practices in Contractual Licences: United States, WT/DS170/R, 1 May 1998.
[177] Australian Law Reform Commission, above n 11, [21.26].
[178] Ibid. Article 28(1) TRIPS states that a patent shall confer on its owner the following exclusive rights: (a) where the subject matter of a patent is a product to prevent third parties not having the owner's consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product; (b) where the subject matter of a patent is a process, to prevent third parties not having the owner's consent from the act of using the process, and from the acts of: using, offering for sale, selling or importing for theses purposes at least the product obtained directly by that process.
[179] Nuffield Council on Bioethics, above n 44, [5.22].
[180] Ministry of Economic Development, Patentability of Genes (2003) <http://www.med.govt.nz/buslt/int_prop/patentsreview/cabinet/part2/section5/html> at 2 December 2004.
[181] Ministry of Economic Development, Patentability of Planes and Animals (2003) <http://www.med.govt.nz/buslt/int_prop/patentsreview/cabinet/part2/section3/html> at 2 December 2004.
[182] European Patent Convention, Article 53(a); Directive on the Legal Protection of Biological Inventions (EU Biotechnology Directive), Article 6(1).
[183] Australian Law Reform Commission, above n 11, [7.54]; European Patent Office, Guidelines for Examination in the European Patent Office (2003) Part C, IV.3.1 <http://www.european-patent-office.org/legal/gui_lines/e/> at 13 January 2005.
[184] Correa, above n 166, 66.
[185] Ontario Report, above n 6, 50.
[186] Australian Law Reform Commission, above n 11, [7.81].
[187] Clause 14 (1) of the draft Patents Bill provides that an invention is not a patentable invention if the commercial exploitation of the invention, so far as claimed in a claim, is contrary to public policy or morality. Clause 14(2) states that for the purposes of subsection (1), commercial exploitation must not be regarded as contrary to public policy or morality only because it is prohibited by any law in force in New Zealand. Clause 14(3) provides that the Commissioner may, for the purpose of making a decision under this section, seek advice from any person that the Commissioner considers appropriate.
[188] Pfizer Inc v Commissioner of Patents (Unreported, Court of Appeal, Anderson P, Glazebrook, William Young, O'Regan and Hammond JJ, 28 June 2004, [56]).
[189] Patents Bill (Draft), cl 14(3).
[190] Ministry of Economic Development and Ministry of Health, above n 3, 11.
[191] Ibid.
[192] Daniel Gervais, 'The TRIPS Agreement - Interpretation and Implementation' (1999) European Intellectual Property Review 156, 159.
[193] Correa, above n 166, 64.
[194] Ibid.
[195] Ontario Report, above n 6, 50.
[196] Ministry of Economic Development, above n 27, 10.
[197] Frankel & McLay, above n 23, 345.
[198] An invention should be considered to have entered the public domain if it has been made available for use or if information regarding it has been made available, including where such information is contained in a complete specification filed in respect of another patent application. This is the approach adopted by the clauses 6, 8 and 9 of the draft Patents Bill.
[199] Patents Act 1953, ss 41(1)(f), 21(1)(e).
[200] Ministry of Economic Development and Ministry of Health, above n 38, 4.
[201] Inutility is currently a ground on which a patent can be revoked but this is rarely used due to the cost in pursuing a revocation. See Patents Act 1953, s 41(1)(g).
[202] Article 57 European Patent Convention; 35 USC 101 and 35 USC 112.
[203] See Nelson v Bowler, 626 F 2d 853, 865 (1980); Aerts, above n 46, 358.
[204] Aerts, above n 46, 358.
[205] Clause 13 of the draft Patents Bill provides that an invention must be useful to be patentable. Clause 10 of the Bill defines 'useful' to mean that an invention has 'a specific, credible and substantial utility'. The government has stated that IPONZ will develop new manuals to govern the interpretation of these provisions. It is hoped that these manuals will encourage an interpretation similar to the US approach and lead to a stringent application of the criteria. See Ministry of Economic Development and Ministry of Health, above n 3, 16.
[206] Article 27(1) TRIPS requires that patents be available for any inventions which 'are new, involve an inventive step and are capable of industrial application'. The fifth footnote in the TRIPS Agreements states that for the purposes of Article 27(1), the terms 'inventive step' and 'capable of industrial application' may be deemed by a Member to be synonymous with the terms 'non-obvious' and 'useful' respectively.
[207] It is expected that the Patents Bill will become law in 2006, subject to the government's legislative priorities. See Ministry of Economic Development and Ministry of Health, above n 3, 2.
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