Background
The Patent System and the Review of the Patents Act 1953
8. A patent is a statutory intellectual property right granted under the Patents Act 1953. The grant of a patent provides the patent owner with the exclusive right to make, use or sell the patented invention during the term of the patent. In New Zealand the patent term is twenty years from the date of filing of the patent application. When the patent expires, the invention can be used by anyone. In exchange for the grant of the patent, the inventor is required to provide a full and complete description of the invention, which is published by the patent granting authority. In New Zealand patents are granted after an examination process by the IPONZ, which is a division of the Business Services Branch of the Ministry of Economic Development.
9. The Patents Act is currently under review with a view to updating the Act to bring it into line with international best practice. The review has been progressed in three stages, with Stage 1 completed in August 2000, Stage 2 completed in May 2001, and Stage 3 completed in July 2003. It is expected that the amended Patents Act will come into force in 2006 (subject to the Government's legislative priorities).
10. Changes to the Act agreed to by Cabinet will have the effect of aligning the criteria for granting a patent in New Zealand with the criteria adopted in most other countries. That is, an invention, to be patentable must be novel, involve an inventive step (be non-obvious) and be useful. To be considered useful an invention will be required to have a "substantial, credible and specific" utility. In addition, the exclusion from patent protection of inventions whose commercial exploitation would be contrary to morality has been strengthened to include inventions whose commercial exploitation would be contrary to ordre public.
11. A previous Cabinet paper (POL Min (03) 26/5) noted that the issue of patents over genetic material had not been specifically addressed in the review of the Patents Act and that due to the national and international debate over the patenting of genetic material further examination of this issue was warranted.
Concerns Raised by the Granting of Patents over Genetic Material
12. Concerns relating to some genetic material patents have come to the fore in New Zealand recently because an Australian company, Genetic Technologies Ltd (GTG), is seeking to enforce two New Zealand patents on non-coding DNA analysis and mapping. There is also currently considerable international debate on the patenting of genetic material, with wide publicity over the exercise of patents on breast and ovarian cancer genes (BRCA1/2).
13. The basic premise of intellectual property rights, including patents, is that the granting of limited monopoly rights over inventions will act as an incentive for innovation. However, some evidence is emerging that patents on genetic material may actually hinder research2 and that creating monopolies on their use may restrict the availability of genetic material or may make medical products prohibitively expensive.
14. Concerns regarding this issue have been raised by various bodies in an international context.3 The Australian Law Reform Commission (ALRC) has also been directed to review this issue and on 4 March 2004 issued a discussion document entitled Discussion Paper 68: Gene Patents and Human Health. The discussion paper makes a number of proposals for dealing with the issues raised by the patenting of genetic materials. Some of these recommendations may be relevant for New Zealand, and these are considered in the discussion below. Submissions on the ALRC discussion paper closed on 16 April 2004, and the ALRC has been directed to present its final report by 30 June 2004.
15. Since the issues considered by the ALRC are much the same as those that have been raised in New Zealand, it is suggested that the ALRC proposals (where relevant to New Zealand) could also form the basis for further reform in this area in New Zealand.
16. While there are a number of ethical debates associated with "patenting life" and whether it is morally acceptable to hold patents over genetic knowledge at all, this review has largely focused on the more practical effects of patenting genetic material. In particular we have examined whether the breadth and nature of genetic material patents allow their owners too extensive control over this key area of technology.
17. There are two areas where the granting of patents over genetic material may cause practical problems:
- the patents may be too broad in scope; and
- patent owners may unreasonably restrict access to their patented genetic material.
The Breadth of Genetic Material Patents
18. Breadth is a particular problem as it relates to patents over gene sequences. A patent for a gene or gene sequence effectively gives the patent owner rights over all uses of the gene even though the patent owner may have identified only one use for the gene. This means that other researchers who find other uses for the gene will have to obtain a licence from the owner of the patent on the gene. A licence may be required just to do the initial research on these other uses, and would certainly be required if the other uses were to be commercially employed.
19. The Nuffield Discussion Paper also raises some serious concerns over the way in which claims to biotechnology patents have been drafted and interpreted, giving rise to situations where it is felt that an overly broad monopoly has been granted.4
The Exercising of Broad Patent Rights
20. Patenting is a well-established practice in healthcare, especially in the pharmaceutical sector. However, increasing commercial pressures are leading patent holders to develop new strategies and business models for the commercial exploitation of their inventions. These new strategies and business models are designed to take maximum advantage of the very broad claims often held over genetic material. These may threaten the optimal provision of healthcare and integrated clinical services through which they are currently provided.
The GTG Patent
21. [withheld under s9(2)(h) of the Official Information Act 1982, as the withholding of this information is necessary to maintain professional legal privilege.].
22. [withheld under s9(2)(h) of the Official Information Act 1982, as the withholding of this information is necessary to maintain professional legal privilege.].
Effects on Research
23. Differing views have been expressed internationally with regard to the effects on research of patents on genetic material. It has been argued that patents and licenses for genetic inventions may stimulate research, knowledge flows, and the entry of new technology into markets, and may promote the commercialisation of research.5
24. The granting of patents over genetic material may discourage further research on the patented genetic material. Those doing further research may need to obtain licences to use the patented genetic material in their research. The costs of negotiating and obtaining licences may be prohibitive for some researchers, and some patent owners may be reluctant to grant licences at all. Researchers using genetic material in their research may also face additional costs in checking to see whether or not they will be infringing patents. They may also need to make allowance for litigation costs in case they inadvertently infringe a patent.
25. Concern has been raised internationally over the patenting of genes that show susceptibility to breast cancer (the BRCA genes) and diagnostic tests using these genes. The owner of these patents (Myriad Genetics) has required 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 licencees in other countries. Any alternative test has to use the patented gene, and any researcher who wishes to develop an alternative test is required by the patent holder to obtain a licence from the patent owner (if a licence is available at all), and pay the licence fee demanded by the patent owner.
Comment
26. The key questions when considering patents over genetic material are:
- On balance, are patents on genetic material serving the public interest?
- Can broad patents (such as those on genetic material) and abuse of patent rights be avoided through vigilant application of the current patent system (with the changes already envisaged to the Patents Act); or
- Is broader action needed to address the issues raised in this report? Should the Patents Act 1953 be further amended to reflect this?
- If more thorough application of the Patents Act is needed how can this be ensured?
27. The changes proposed for the Patents Act which were agreed to by Cabinet (POL Min (03) 25/4) are expected to bring our patent system into line with the practice of other countries. However, other countries are also reviewing the issue of patents on genetic material. As a result of other countries' reviews in this area, New Zealand may need to consider further changes to New Zealand's Patents Act in the future.
28. It is difficult to quantify the size of this problem as there are a number of factors that will influence the effects that patents over genetic material will have on the research community and the health sector in New Zealand, such as the licensing practices of patent holders, the use and uptake of genetic technologies and the rate of advancement in this area.
29. Any changes to New Zealand's patent policy need to include consideration of:
- New Zealand's international obligations as party to the WTO Agreement on Trade Related Aspects of Intellectual Property (TRIPS).
- The effects on the research community in New Zealand.
- The impacts on other fields of technology.
- Consultation with groups identified by the Royal Commission on Genetic Modification as having special interests in these issues.
30. Discussion of options to address the concerns over genetic material patents includes the practice of granting of patents and the licensing strategies of patent holders. These two issues are inextricably linked because a patent holder can only licence what they have rights over. Discussed below are some options available for addressing concerns in this area. Not all options involve amendments to the Patents Act, as there are a number of options relating to institutional arrangements that could improve the current application of the Patents Act.
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