D'Arcy v Myriad Genetics Inc & Anor

[2015] HCATrans 147

[2015] HCATrans 147

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S28 of 2015

B e t w e e n -

YVONNE D’ARCY

Appellant

and

MYRIAD GENETICS INC

First Respondent

GENETIC TECHNOLOGIES LIMITED ABN 17 009 212 328

Second Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 17 JUNE 2015, AT 10.17 AM

(Continued from 16/6/15)

Copyright in the High Court of Australia

FRENCH CJ:   Yes, Mr Shavin.

MR SHAVIN:   If the Court pleases.  I foreshadowed to the Court last night that there were two substantive matters I would seek to take the Court to fairly briefly.  The first is to identify some matters that are raised by the decision of this Court in Apotex v Sanofi‑Aventis, and to two matters that arise from that. In the bundle, it is tab 6, and the print that has been circulated is of the Australian Law Report version 304 ALR 1. If I could first take the Court very briefly to two passages from your Honour the Chief Justice’s reasons, and the first is at paragraph [44] on page 50. The part of this paragraph which we would seek to refresh the Court’s memory is your Honour’s statement that:

An important constraint is that a propounded development of legal principle involving large questions of public policy and reconciliation of interests in tension is, for the most part, best left to the legislature.  On the other hand, a qualification or exception to a general principle may have become anomalous to such an extent that its removal would enhance the logical and/or normative coherence of the law.

In our respectful submission, the relevance of that statement to the present proceeding is that if this Court was to seek to make some form of exemption or limitation upon the statement of principle articulated by the Court in NRDC, it is important that it be framed in a way that has a coherence with the rest of those reasons and some normative principle underlying it.  As we sought to develop yesterday and will conclude with today, when one considers each of the options available, in our respectful submission it is not really practicable to play with the conclusion that was developed at page 277 of the NRDC Case.

FRENCH CJ:   It may be that NRDC does not provide us with an answer.  It was not addressing this problem, and I suppose the question then is if it is not able to be dealt with as a matter of coherence, which was the approach that I took in Apotex v Sanofi, do the concepts of instrumentalism versus “proprietarianism”, which I mentioned in, I think, the following paragraph, [45], have any part to play in determining the basis upon which we make, if there be a choice, the common law choice?

MR SHAVIN:   Yes, but with a danger.  If one is to establish a coherent set of principles enabling everyone to understand what is the proper subject matter for an invention that is patentable, it is difficult to have a balanced difference, in our respectful submission, to the NRDC balance that you should use the remaining parts of section 18 to ensure that there is a tightness and discipline in the approach and in the next part of the judgment to which we will come, it is quite clear – I am sorry, when we come to Mirabella, it is quite clear that in fact section 18 is to be dealt with separately, consistent with the approach that was taken by this Court in Lockwood (No 1) but articulated particularly by this Court in Mirabella.  We find that it is important to approach the question of patentable subject matter separately from the questions of obviousness and novelty.

FRENCH CJ:   But coherently with them.

MR SHAVIN:   Yes, but not having one doing the work of the other.

FRENCH CJ:   Can it not – if it is a common law process, which manner of manufacture enlivens, that means there are judicial choices, and they can be informed by notions of coherence and why should not the balance of the legislative framework inform that judgment?

MR SHAVIN:   The balance of the legislative framework can form that judgment.  It would be our respectful submission that it is appropriate for the Court to look at what has happened overseas as well.

FRENCH CJ:   Yes, I am not excluding that as a relevant consideration.

MR SHAVIN:   Because, the approach that has been adopted in Europe and in the United Kingdom has been to clearly say, this is not a class of subject matter which is to be excluded from patentability.  In our respectful submission, that does raise some very difficult questions for the Court, because if one accepts as a proposition that isolated nucleic acids are patentable subject matter, and one then asks what is causing concern in relation to the claims in suit, one finds two things.

The first, as we will note shortly, the issue of utility, on which there is very little in the judgments before for a simple reason, and that is that it was not in issue, and I will take the Court in a few minutes to passages in both the trial judgment and in the intermediate appellate court and the Full Federal Court, which show that it was conceded by our friends – so, there was no evidence adduced to it, and there was no argument addressed to the point – and that is why the Court might be having difficulty finding in the Full Court’s reasons a clear articulation of that, because it simply was not in issue below.

So that could be the first cause of the court having problems.  The second might be that the only issue that has been litigated – for a reason that one can readily discern as a matter of policy – has been the question of section 6.  There has been no attention paid below to whether, if one was examining the claims under section 40 or other aspects of section 18, there might have been different conclusions drawn as to them.

Thus, it is important, we respectfully suggest to the Court, to keep in mind that there is only the one principle that has been litigated.  A number of the issues that have been raised by, I think almost every member of the Court with me during the course of yesterday afternoon – the question that your Honour Justice Nettle raised of width, the question that your Honour Justice Gordon raised with me on the concepts of infringement and the scope and width of infringement, the concepts that Justice Gageler raised with me in terms of what is the scope, what is the subject matter that we are really seeking to encompass within the claim - these are issues which one could readily see could raise questions under section 40, could have raised questions under section 18(b) and (c), particularly (b).  But they are not the subject of the proceeding.  When one keeps that in mind, in our respectful submission, returning to your Honour the Chief Justice’s question, then the only issue really is the issue of principle, that is, is an isolated nucleic acid proper subject matter? 

FRENCH CJ:   Just coming back to this point about the distinction you draw between the manner of manufacture question and what appears in other parts of the statute.  One has to bear in mind, does one not, that some of the statutory requirements for validity grew out of or reflected common law grounds in the action for scire facias challenging the validity of patents and that all came out of the notion of lack of subject matter relevant to the question of whether it was a manner of manufacture.  So, one cannot simply see these as sort of alien worlds of discourse.

MR SHAVIN:   They are not alien worlds of discourse but they have taken on a separate life.  Perhaps, could I interpose of my submissions and take the Court to Mirabella.  I think the Court has been provided with a copy of Philips v Mirabella 183 CLR 655 and if I could take the Court to a passage which appears at the top of page 664 but which really arises out of a quite lengthy discourse on the preceding page. It might perhaps, given the nature of the discourse, be useful to go back to 663 to identify the argument that Philips was advancing to the Court:

In essence, Philips’ argument is that the members of the Federal Court fell into error by failing to recognise that s 18(1)(b)’s requirements of novelty and inventive step (when compared with the identified applicable prior art base) are exclusive and exhaustive in so far as inventiveness (whether of step or idea) is concerned with the result that, if those requirements are satisfied, it is simply irrelevant that the subject matter of the claim as identified in the specification lacks the quality of inventiveness required by the principles which have been developed for the application of s 6 ‑

Now, that was the question that the Court was considering, and when one comes to 664, the Court concluded that what it previously had said:

does not mean that the threshold requirement of “an alleged invention” corresponds with or renders otiose the more specific requirements of novelty and inventive step (when compared with the prior art base) contained in s 18(1)(b).  It simply means that, if it is apparent on the face of the specification that the quality of inventiveness necessary for there to be a proper subject of letters patent under the Statute of Monopolies is absent, one need go no further.

So, the Court seems to be articulating a multistep process, that you first ask the question, is this patentable subject matter?  Is this subject matter that falls within the concepts that have evolved under the Statute of Monopolies?  Once you find that you are within the field of discourse, then you come under the rest of the section to say is it obvious and is it novel, but the novelty is not the same as the newness.

KIEFEL J:   What the Court said at those pages in rejecting the argument put by Philips was that there is a threshold test of inventiveness.  It might be at a level of generality, but there is a threshold test at the point – and as appears later in the judgment it is a separate question from “is there a new manner of manufacture?” but it is a test that has to be passed.  Then there are the more specific tests, as you say, of obviousness and novelty.

MR SHAVIN:   What they say a couple of pages later too, as your Honour will appreciate, is that when you look at the introductory words to the section, and you look at paragraph (a), in fact they encompass the same concepts, notwithstanding the absence of the word “new” in (a) and the inclusion of the word “new” in the dictionary definition of “invention”.  Thus, what you do find when you look at section 18 is that you have in the introductory words:

an invention is a patentable invention –

and then you have four requirements – five, if you break (b) into two.  The first is –

is a manner of manufacture within the meaning of section 6 –

and in Mirabella, the majority were firmly of the view that that was the same concept as the introductory words.  Then you have additionally and separately obviousness, novelty, usefulness and not secret use.  In our respectful submission, you do not merge the concepts, but you are instructed – if we might put it this way, your Honour – that none of these concepts are inconsistent with each other.  They build upon each other, but they come in levels of generality.

KIEFEL J:   But when you say that the Court considered that the question of an invention and manner of manufacture were coherent in a sense, you are talking about the passage which appears from the end of page 666 to the top of 667.

MR SHAVIN:   Yes.

KIEFEL J:   And I think more specifically, their Honours were saying that the question of whether there is an invention in the traditional concept goes a long way to answering the question of manner of manufacture.  I think that is really what they were saying.

MR SHAVIN:   Yes, and if we can put it this way.  That although there was discourse in NRDC on the concept of newness, what the Court held here quite clearly is that it is wrong to view Microcell as having been determined on newness, and as we urged upon the Court yesterday, in our respectful submission, the discussion at pages 261 to 263 of NRDC is not focused on the issue of newness.  That was the start of the discourse, but the discourse was always exploring the meaning of section 6, and newness is an element, and then because of the way in which Morton J’s rules, if I can so describe them, had been discussed in the common law evolution of the term, the Court focused on vendible product. 

Then in the context of a vendible product, the Court broke that down to what is a product and a product was not that which one might have thought of in the 17th century of something that comes out of factory but it was a much deeper and richer conception which ultimately found its form in an artificially created state of affairs, and vendible was something that simply became of economic significance.  That concept of economic significance was dealt with by your Honour Justice Kiefel and Justice Crennan in Apotex at paragraph [278].  We would seek then to draw something from it, but it was that issue which was not explored below because it was the subject of concession.  So that when you look back at ‑ ‑ ‑

KIEFEL J:   Could I just ask you to clarify, when you say a “subject of concession”, does the concession appear somewhere in clear terms, the extent to which ‑ the terms in which it was conceded?

MR SHAVIN:   I had checked overnight the comments in the judgments, rather than the pleadings ‑ ‑ ‑

KIEFEL J:   All I am really asking is, is the concession of which you speak that the economic significance or practical utility of claims 1 to 3 that they are useful for diagnosis because they impart knowledge?

MR SHAVIN:   Can I put to you what his Honour the trial judge said ‑ ‑ ‑

KIEFEL J:   I do not mind if you come back to it later, if your junior is checking it.

MR SHAVIN:   I can deal with it conveniently now, if it is convenient for the Court.

KIEFEL J:   Yes, thank you.

MR SHAVIN:   In the Court book volume 2, page 628 ‑ Mr Dimitriadis is just checking the pleadings whilst I do this - at the end of paragraph 88, his Honour the learned trial judge in this and the preceding paragraphs had been considering NRDC.  Starting at the foot of page Court book 627, he referred to the passage:

In the NRDC case, the product was the discernable effect achieved by the use of selective herbicides which killed weeds but not particular types of crops to which they might be applied.  The economic significance of the methods the subject of the patent in terms of improved crop production was virtually self‑evident in that case.  In the present case, the question of economic significance may be put aside because, as I have previously mentioned, the applicants accepted that this aspect of the requirements of patentability established by NRDC was satisfied.

KIEFEL J:   Where is the previously mentioned?

MR SHAVIN:   My learned friend has assisted me with paragraph 8, yes.  Paragraph 8 on page Court book 605, second last dot point at line 44:

The applicants accepted that the subject matter of each of the disputed claims satisfied the second of the essential qualities of an invention referred to by the High Court in NRDC.  In this regard, the applicants accepted that the subject matter of the disputed claims was of “economic significance”.

Then, in the Full Court, this was dealt with in three places.  At Court book 698, at paragraph 165, the court below noted:

Ms D’Arcy agrees that the isolation requires human intervention but says that it is not artificial and, if it is, it is not sufficient to fulfil the test in NRDC which does not stand, she says, for the proposition that an artificial effect is ‘the be all and end all’ of the question.  That is, she submits that while the claimed invention has economic significance, it is not an artificial effect ‑

Then the Full Court goes at paragraph 170 on page 699:

The economic benefit of the claimed invention is not in issue.  It is necessary to look at the substance of what is claimed to see to what extent it departs from unpatentable subject matter, such as an abstract idea.

KIEFEL J:   Speaking for myself, I would be assisted if I could understand just what was identified as the economic benefit?  I am not doubting that there is, I just want to see what the plaintiff below said.

MR SHAVIN:   My recollection – and this was, of course, a couple of years ago – my recollection is that we did not particularly articulate it.  What I was going to do ‑ ‑ ‑

KIEFEL J:   That might be part of the problem we are having.

MR SHAVIN:   Yes.  It was not articulated because the aspect was not put in issue by our friends.

KIEFEL J:   Yes, I understand that. 

MR SHAVIN:   What I was going to do was to take the Court – and perhaps now might be as good a time as any – to two things, to remind the Court of the actual sentence in NRDC from which this debate sprang and then take the Court to a few paragraphs of the primer which may assist the Court in understanding how an answer can be discerned from the material even though the parties did not address evidence directly to this issue because of the way in which the case evolved at trial.

FRENCH CJ:   I suppose it is possible that the economic significance concession may have related to what appears in the subsequent claims because they, as it were, imply particular uses of the isolated nucleic acid, the invectors and probes, and all the rest of it.

MR SHAVIN:   Yes.  One way, your Honour, in which one can test the relevance of that is to say if, as the Court affirmed in Mirabella and your Honour noted at paragraph [44], you can have a claim for a product per se and you did not have any of the other claims, would there be any less validity in the claims in suit – that is 1 to 3. If, in fact, claims 1 to 3 involve patentable subject matter, strictly speaking you do not need the subsequent claims because they all build upon that building block. There is an essential integer.

FRENCH CJ:   Yes.  I am just wondering where the economic significance comes from and whether it, perhaps, really comes from those subsequent claims.

MR SHAVIN:   Yes.  Because, when one goes back to NRDC – and I know that the Court probably has this passage almost by heart now and I apologise for taking the Court to it again – but NRDC at 277, and it is two lines under the reference to Justice Windeyer in the margin, there is the sentence:

And the significance of the product is economic; for it provides a remarkable advantage, indeed to the lay mind a sensational advantage –

The use of the language and the significance of the product is economic, in our respectful submission is itself of significance because ‑ ‑ ‑

KIEFEL J:   I am sorry, I did not mean to interrupt you.

MR SHAVIN:   No, no.

KIEFEL J:   Does there need, though, to be a discernible economic advantage identified for each claim?

MR SHAVIN:   Not in the claim.

KIEFEL J:   No, but discernible from it.

MR SHAVIN:   Yes.  You see, in our respectful submission, where you have something that is dealing with tools for methods of treatment, if you can show that the tool is useful - and in the primer we see a number of propositions which are technically not contested, apart from issues of relevance that our friend articulated – one can then see that there is an economic aspect to the invention claimed because you have something which is plainly of value and can be traded.

KIEFEL J:   But the utility must relate to the subject matter of each claim, must it not?

MR SHAVIN:   Yes, but the subject matter of this claim is it provides you with a tool.  If you have a hammer it may not be intrinsically valuable but it is valuable because you can use it to construct something by hammering a nail rather than a thumb, but by using it to do something.  You do not have to have the end product.  The concept of a product in the phrase “vendible product” is a long way away from saying it is only the end product.  The concept of vendible ‑ ‑ ‑

KEANE J:   No, but it is vendible in the sense that the economic significance of the product can be realised ‑ ‑ ‑

MR SHAVIN:   Yes.

KEANE J:   ‑ ‑ ‑ in the case of a vendible product by selling it.  How does one realise the economic significance of claims 1, 2 and 3?

MR SHAVIN:   Because as a part of a process it would be something to be – a value can be achieved for its creation, so that if in fact this is ‑ ‑ ‑

KEANE J:   How do you realise that value, save by denying other people the ability to do the same thing?

MR SHAVIN:   You charge for it.  So that if you are the ‑ ‑ ‑

KEANE J:   You can only charge for it if you have the statutory monopoly.

MR SHAVIN:   Well, you can – I doubt that absent a statutory monopoly would necessarily be provided for free, even in a public hospital system fully government funded, if there was such a thing.  There would be costs incurred in its creation and costs in an economic sense would get an economic return so there would be a charge.

KEANE J:   Mr Shavin, I understand that and I can understand the economic significance of having something which one can use for the purposes of diagnosis and treatment, but that does seem to involve an application, a different application and a different vendible product.

MR SHAVIN:   But I think – if I might respond in this way, your Honour ‑ if I am understanding the proposition that your Honour is advancing to me, is that the only thing that can be a product is an end product because this is a product which is a tool that is used to create something else.

Can I become very prosaic?  You have a gearbox, you have a gear.  The gear itself, the wheel, the toothed wheel you have is not itself of enormous economic significance but it is when you put it into a gearbox and the gearbox is a vendible product but no one could deny that the gear itself was of economic significance, even though its real utility was to form part of something else which was the thing actually sold.  Yes, the gear is sold as an input but so too is the product that is the subject of claims 1 to 3.

It does not, in our respectful submission, take them outside the concept of vendible product.  What the High Court did in NRDC in exploring the common law development of the phrase “vendible product” was to look at where it started in the very narrow sense and enrich the concept as having a significance far beyond the mere word and so the Court warned us against going to a dictionary in the way that the United States Supreme Court went to a dictionary to understand “manufacture”.

In Australia you do not do that.  In looking at that concept you are looking at something which is the product, is the product of a process, it is a method, it is an end achieved.  It is an artificially created state of affairs.  We have come a long way from what might have been considered in 1623 and thus it does not preclude something that is a step along the way. 

It does not preclude, for example, a chemical composition which is an active ingredient that is of economic utility only when it is put into another product with excipients and into some form of dosage form and yes, you might sell the dosage form.  You might never sell in a retail sense, the active ingredient in its isolated form but it is of true economic significance. 

So too, when you have the isolated nucleic acid which is the subject of each of these claims, the real retail significance might be in the probe or the sector or the assessment, but that does not deprive it of its own significance as being the core element and it is our respectful submission that the phrase “vendible product” encompasses both the pharmaceutical composition of the active ingredient and encompasses the isolated nucleic acid.

GAGELER J:   Does it follow from your submission that any isolated nucleic acid would be patentable subject matter?

MR SHAVIN:   I am pausing on “any”, your Honour, because I am not quite sure that I fully understand the technical consequences of saying “yes”.  Assuming that in the isolated nucleic acid that we are talking about, we are talking of the sort of acid that has been the subject of the evidence in this case, that it is in a form that is different to that which is in nature – it has been extracted in the way in which we discussed yesterday afternoon – then our answer would be “yes”.

FRENCH CJ:   So, it might be an isolated nucleic acid coding for red hair, an isolated nucleic acid coding for Huntington’s disease – one could imagine a very large category of ‑ ‑ ‑

MR SHAVIN:   Yes, just as this Court refused to put “juice” in a category by itself.  Could I respond to an earlier question of the Court of the articulation below?  There is no reference in the pleadings to the issue, and the best reference that we can see is that which I took the Court to a few moments ago in paragraph 8 of the trial judge’s judgment at page 605 in the penultimate dot point.  Thus, the end point of that submission is to say that a vendible product includes something that is used in something else of value, that that does not deprive it of economic significance, and thus, an isolated nucleic acid, putting to one side the extent of its artificiality for the moment, simply looking at its characteristic as having a significance that is used in something else is within the concept of a vendible product in just the same way as an active ingredient is.

NETTLE J:   Just to follow up on that last answer that you gave about other isolated nucleic acids being patentable inventions.  Dr Suthers gave evidence about tests having been for a long time done on various other genes – not the one that you discovered, but others – by processes similar to those which are used with yours in order to look for correlations different to those that you put in your schedule, but which are nonetheless of diagnostic significance.  When that was done in the past, as it were, on this analysis, would each time that a pathologist isolated a different gene for one of those purposes have been a patentable invention, subject to novelty and so forth?

MR SHAVIN:   I was going to add subject to obviousness and novelty, but was it patentable subject matter?

NETTLE J:   Yes.

MR SHAVIN:   Yes, in our respectful submission, without prejudging whether one looked at the state of common general knowledge at the time would it have satisfied the test for obviousness, assuming from the criteria your Honour gave that it would satisfy the test of novelty, and we say nothing about obviousness.

NETTLE J:   Thank you.

GORDON J:   Can I ask one question about the interrelationship between economic significance and then the utility concession because, so far as I understand it, those submissions this morning have been addressed to the second limb in NRDC and not the concession that I understood was made about the other requirements in section 18.  Is that concession about utility recorded somewhere separately from the concession about economic significance or is it the same?

MR SHAVIN:   The way in which it was recorded, if I recall correctly, your Honour, is that the only ground of objection cited was in the pleadings was that it was not a manner of manufacture.

GORDON J:   So the answer to my question is that the utility concession was a bare concession that it was of utility and useful and that is the extent of it?

MR SHAVIN:   I am just pausing when your Honour said “utility”.

GORDON J:   I have directed my attention to subsection (c) of section 18 as distinct from the questions raised by NRDC. 

MR SHAVIN:   The particulars of invalidity, your Honour, are found at page 9 of volume 1 of the appeal book, and there are only two grounds raised.  In paragraph 15:

Claims 1‑3 do not claim a ‘manner of manufacture’ or ‘manner of new manufacture’ within the meaning of section 6 of the Statute of Monopolies 1623 and s18(1)(a) of the Patents Act 1990.

Particulars are given of that, all of which go to what I might compendiously describe as the product part, and over the page at paragraph 16:

Further, or in the alternative, the alleged invention is not a patentable invention in that, so far as claimed in claims 1‑3, it is not a manner of manufacture within the meaning of s6 of the Statute of Monopolies.

That presumably is perhaps picking up the Mirabella issue, but they are the only two grounds.  So there was no ground alleged of invalidity in relation to (b), (c) or (d) of section 18(1), thus no cause for a concession would arise because those paragraphs were not placed in issue.

GORDON J:   Thank you.

KIEFEL J:   Was the claim in paragraph 16 pursued through to the Full Court?

MR SHAVIN:   As part – as I understand it – of our friend’s argument.  We understand our friend’s argument – 17 is not pursued here now – but as I understand it as part of our friend’s argument, we discovered, through as our friend described as a very fine science, what the gene sequence was.  Then, our friend says there is no relevant at the relevant level of discourse distinction between that discovery and that which is claimed.  I think that it is in that sense – and my friend will correct me if I am wrong – that paragraph 16 of the particulars is pursued.

Our response to that is to say that ignores the isolated.  Where we differ, as the Court will appreciate, is that our friends say the relevant level of discourse is the discovery, and we say that has exactly the flaws that our friends identified from referring to the speech of Lord Hoffmann in the erythropoietin case in the United Kingdom, where he said it is wrong to look to the underlying discovery disclosed in the body of the specification, rather than to look at the invention claimed.  Here, we draw the Court’s attention repeatedly, as we sought yesterday afternoon, to the fact that we are talking here about an isolated nucleic acid with certain characteristics.

FRENCH CJ:   Just understanding the scale of the general proposition upon which all of this rests.

MR SHAVIN:   Yes.

FRENCH CJ:   Is it right to say that underpinning your particular argument is the general proposition that any isolated nucleic acid coding for any genetic characteristic, including susceptibility to a specific disease, is a manner of manufacture?

MR SHAVIN:   Yes, which enables one to then progress into the rest of section 18 to determine whether in fact it justifies the grant of a patent.  That the gatekeeper is section 6, but then the particular grounds of invalidity have to be satisfied, and the proposition has been advanced by your Honour the Chief Justice, Justice Gageler, Justice Nettle in particular, may raise questions as to whether in every instance the issue under 18(1)(b) of obviousness will necessarily be satisfied.

GAGELER J:   Does the proposition extend to any isolated body part?

MR SHAVIN:   I think that is going too far, because if all one did was to chop out the heart by severing some veins and arteries – that is slightly oversimplifying it – but then, you have a heart and you pull it out and you have got a heart ‑ that is not isolated in the sense that the nucleic acid is as the evidence disclosed.

GAGELER J:   So, if the body part, say a kidney, underwent some chemical change as the result of isolation, would that be sufficient?

MR SHAVIN:   Apart from dying, it is hard to understand what those changes might be.  If I could put it in this way, the process of isolation of a nucleic acid involves more than snipping the ends and pulling it out.  I think I referred to kind of the snakes that children eat – sometimes large children and old children eat.  You have got an identifiable thing.  You snip it, you pull it out.  That is quite different to the processes that are involved in isolating a nucleic acid from the genome where you have got to go through a process of destruction, of breaking it up and reassembly in a complicated way.

I am not saying a new way, necessarily, but in a complicated way so that what you have is chemically, structurally, functionally different.  If one simply takes a body part which by simple surgery – the use of a scalpel – one excises, then the body part that comes out, one could imagine may well be structurally the same – may well be chemically the same – and except that it is dead, would be functionally the same, but it would perform the same functions.  One could see that as a possibility.

So, I pause at a body part because an essential element on the evidence that was relied upon below is that in isolating the nucleic acid you are not simply going chop and pulling out.  You are changing the character of that which is found intracellularly.  I did deviate very slightly from where I had been going.  Could I, perhaps, return to Apotex?  It may be unnecessary to do so, but could I just refer very briefly to paragraph [50] of your Honour the Chief Justice’s reasons in Apotex at page 22? 

KIEFEL J:   Sorry, did you say paragraph 23?

MR SHAVIN:   Paragraph [50] at page 22.

KIEFEL J:   Paragraph [50], thank you.

MR SHAVIN:   It is really a continuation of the previous thought.  That is, if one is going to isolate something out of NRDC, there needs to be a clear and consistent foundation for the exclusion or the exception.  Could I go more substantively now to the joint reasons of your Honour Justice Kiefel and Justice Crennan, initially to paragraph [244]?  This is to make what, in a sense, is an obvious point, and for that I apologise to the Court, but as your Honours noted by taking an extract from Terrell, with which everyone will be familiar, it is one of the two foundation UK patent texts, and I think it is 18th or 19th edition now:

Historically, the first inventor of a new product suitable for use in medical treatment was entitled to a claim to the product per se.

I only wish to underline that, because in part of the discourse yesterday afternoon, there were times when we moved to the question as to whether you had in the product claim to identify the use, and we were responding by saying no, it is a product claim, you can claim the product itself.  This was simply a recognition by your Honour Justice Kiefel and Justice Crennan that this is not a controversial proposition.

It can be found in Terrell; it can be found in every edition, I expect – you go back in Terrell, and it can be found, for those of us who remember Blanco White, in the green and blue editions of Blanco White, the fourth edition which, I think, was 1974, and the fifth edition which, I think, was late 1980s, but still on the 1949 Act and not on the 1977 Act.  In each of these classic patent texts which this Court and all patent courts in Australia have adopted as being authoritative guides, together with the courts of the United Kingdom, this is a proposition which is not controversial.

Can I then move from that to paragraph [278] of the joint reasons, which is at page 71?  This deals with the question of “essentially non‑economic”, and it was as an introduction into this section that I reminded the Court of the actual language in NRDC at page 277, namely, “And the significance of the product is economic”.  What your Honour Justice Kiefel and Justice Crennan said is:

First, in the context of patent law, the expression “essentially non‑economic” takes its meaning from the long‑understood requirement that the subject matter of a patent (whether a product, or a method or process) must have some useful application, that is, must be capable of being practically applied in commerce or industry.  A requirement that an invention have “economic utility” raises the same considerations as the requirement in the Patents Act 1977 (UK) and the EPC that an invention must be susceptible or capable of industrial application.

The Court will recall that yesterday, when we went to the European Directive and we went to Schedule A2 to the amended 1977 UK Patents Act, there was the requirement of industrial application that had to be satisfied in relation to isolated nucleic acids:

So much is apparent from the definition of “exploit” in the 1990 Act, referring to products and to methods or processes, and the case law developed and applied for a very long time in respect of the requirement of utility, now found in section 18(1)(c) ‑

Your Honour Justice Gordon, as we identified from the pleadings, there was no objection taken of a lack of utility, so it was not a matter that was explored in the evidence or submissions.  Now, in that context, could I then take the Court back to the agreed primer, and particularly to page 24.  Page 24 and the following page in paragraphs 73 to 78, the primer identifies a number of properties and uses of isolated nucleic acids, and the references are given to the affidavit of Professor Brown, and the appeal book references are given.

If I can just – from the commencement of each paragraph, without troubling the Court with the detail, list them so that an isolated nucleic acid has properties that are useful in experimental circumstances not possessed by nucleic acid in its native state.  We explored this to some extent yesterday afternoon.  An isolated nucleic acid can be used as a probe to investigate tissues to see whether particular genes are being expressed.  Yes, this is dealt with in subsequent claims, but in our respectful submission, the fact that they put in subsequent claims does not say they had to, nor does it deprive from the significance of what is in claims 1 to 3.

KIEFEL J:   Is the usefulness of claims 1 to 3 identified in paragraph 78, that is, for genetic testing?

MR SHAVIN:   It is a use, yes.  I say a use because if, whilst on the page, I was to draw your Honours’ attention to paragraph 76, that may not be coterminous with paragraph 78.

GAGELER J:   So all of these paragraphs refer to any isolated nucleic acid?

MR SHAVIN:   Yes, yes, I believe so, your Honours.  Yes, there is nothing specific about this particular isolated nucleic acid to have these characteristics.

NETTLE J:   But it would not always necessarily be the case that any isolated nucleic acid would reveal mutations which would be of diagnostic significance.

MR SHAVIN:   Absolutely, your Honour.

NETTLE J:   Yet, are not these isolated nucleic acids all directed to that kind?

MR SHAVIN:   Well, they are directed to testing, your Honour.  Your Honour in your Honour’s question presupposes, for example, a healthy gene in an unmodified state.  But even such a gene can be tested to see whether it has some anomaly.  Again, I hesitate in the universal application, just in case there are some isolated nucleic acids that are of no significance at all.

NETTLE J:   But will it always be the case that any mutation in a gene will be indicative of some sort of disability or condition?

MR SHAVIN:   No.  When one has ‑ I am trying to make sure I do not go beyond the evidence.  The evidence discloses that there are a lot of variations that naturally occur in genes.  You can see that when one explores the patent which is not easy bedtime reading, but when one explores the patent, it becomes apparent that there are variations between genes.  There are things that naturally go wrong.  There are things that naturally are inherited which may or may not have a significance for any known disease.  They simply might be a stop signal start.

So, that in fact it was instead of getting a full length polypeptide, you are getting a shorter one, and the shorter one may not produce a protein and may not produce anything.  That does not necessarily mean that it is related to some known disorder.  There is a lot about the genes that we do not understand at the moment.  It was not so long ago that everyone regarded introns as junk and now it is understood that introns have enormous significance but we are still learning about them.

NETTLE J:   I am sorry to make a meal of this ‑ ‑ ‑

MR SHAVIN:   No, no, certainly, your Honour.

NETTLE J:   ‑ ‑ ‑ just looking at the first sentence of paragraph 78 in the primer “Isolated nucleic acid . . . is used for genetic testing”.  Is it therefore the only sort of isolated nucleic acid we are talking about here is that isolated nucleic acid which relates to genes which are appropriate for genetic testing, it being accepted there are some which are not?

MR SHAVIN:   Yes, there are some which I do not know whether they are or not, your Honour.

NETTLE J:   Still, on the current stated knowledge they are not known to be so.

MR SHAVIN:   Yes, and one of the discoveries that was made, that I do not think is in contest, is that what was identified by the consideration of a number of kindreds and it was in Utah because you have large lots of associated kindreds and from them it was ascertained first that there was a correlation between certain mutations and a predisposition to breast cancer.

Then further work was done to establish the strength of the correlation, but prior to that no one quite knew where the BRAC1 gene was first, and no one had understood that there were mutations in that gene which had a very high correlation with breast cancer.  I am not sure that even today, fully causative significance has been established, but what was established was a very high correlation so that you could make predictions by identifying the mutations of polymorphisms.

NETTLE J:   Is it fair to say then that these paragraphs directed to isolated nucleic acid are directed only to that sort of isolated nucleic acid which is known to be or which is discovered to be significant for diagnostic purposes?

MR SHAVIN:   Yes, with this explanation.  To isolate it you would have to have a reason to do so.  So you would not, as a matter of course, just randomly isolate nucleic acids.

NETTLE J:   Not unless you are exploring, I suppose.

MR SHAVIN:   No, but even then with research funds as they are you would normally have to have an objective in mind.  With that qualification the answer is yes.

GORDON J:   It has to be right, is it not, Mr Shavin, because at appeal book page 121 at paragraph 50 the evidence discloses that:

There are also many variations in a person’s DNA sequences that have not yet been characterised –

They are “rare” and they –

are irrelevant to medical decision‑making unless new knowledge –

is discovered.

MR SHAVIN:   Yes, and, your Honour, knowledge not to that particular passage but to that evidence was underpinning my answers.

GORDON J:   I see.

MR SHAVIN:   I did not have that particular passage in my mind but I had in mind that there was evidence to that effect that was in the trial. 

GORDON J:   This is in Mr Suthers’ report.

MR SHAVIN:   Yes.  That was not controversial and I believe that Professor Rasko and Professor Brown had similar statements.  Now, the purpose, therefore, of my drawing the Court’s attention to these paragraphs of the primer is to show the uses of isolated nucleic acids and to show that there is in the material before the Court something which underpins the concession that was made by our friends at trial, that there was a significance that was economic, that it is not a concession that the Court should say there was no basis for it.  This provides some basis, and the Court will understand why it was not fully explored by either the judge at first instance or the Full Court because it was not a matter that was argued. 

Could I then briefly return to [279] and [280] of the joint reasons in Apotex of your Honour Justice Kiefel and Justice Crennan, and these are very short points.  The first is that of course the 1990 Act contains no specific exclusion for patentability of these genes, just as in Apotex v Sanofi there was no specific exclusion of methods of medical treatment, and [281] is just affirming a proposition which we have put from time to time, both yesterday afternoon and this morning, that there is no normative distinction to be drawn from the provisions of the 1990 Act. 

That case, your Honour, was looking at the contrast between a method of treatment of the human body which was cosmetic and those which are medical, here, for example, picking up on the approach of the United States Supreme Court in Myriad between cDNA and an isolated nucleic acid produced by PCR and to remind the Court, of course, that in Myriad at page 2117, in the second column in talking about Funk, the court noted:

His patent claim thus fell squarely within the law of nature exception.  So do Myriad’s.

This is simply to highlight that the approach that was taken was to adopt a law of nature exception – that Myriad’s claim fell within it, but not the cDNA claim.  We say at that point there is no normative principle that would distinguish between the two.  In fact, I have already taken ‑ ‑ ‑

FRENCH CJ:   On one view, if the first claim is bad in respect of isolated nucleic acid produced by PCR process, then it is bad for isolated nucleic acid produced as a result of the cDNA production.

MR SHAVIN:   Yes, and that, of course, creates for the Court this dilemma.  If the Court was to take the view that an isolated nucleic acid is not patentable subject matter, we are inconsistent with Europe, including the UK.  If the Court takes the view that an isolated nucleic acid produced by cDNA is also a non‑patentable subject matter we are inconsistent with the United States, so we then succeed in being inconsistent with all our major trading partners. 

If the Court then says there is no distinction between saying an isolated nucleic acid is prepared by cDNA or by PCR, how do we deal with it, our response is to say this Court has given the answer.  You deal with that beautiful articulation in NRDC of saying is it an artificially created state of affairs, that is, you do not look to – as the United States do, in our respectful submission – to what extent is it the same as nature because at one level everything, as Justice Frankfurter said, evolves from nature. 

You look to say to what extent is it different, to what extent is it artificial?  But then if the Court says this is not artificial enough, where do you draw the line?  One carbon atom – it is only a little carbon atom – who really worries about a little carbon atom – except it can change all of the qualities of the compound.  Take a little ion away you change all the qualities, even change its three‑dimensional form, as this Court has found, in racemates, in the isolation of racemates.  Lundbeck – escitalopram and citalopram, changing the isomer, looking at the isomer gives you completely different physical, chemical, pharmacological characteristics, changes the way in which it binds.

BELL J:   The subject of the claim here depends on not changing the sequence of nucleotides.

MR SHAVIN:   But it depends upon taking it out of the cell and changing that.

BELL J:   I understand that.  We come back to the question being, as put by Mr Catterns at transcript 738 yesterday:

whether the isolation provides sufficient artifice –

Now, I understand your point is there are no gradations of artificiality, and it is sufficient that this nucleotide sequence identical to the nucleotide sequence in the tissue cell taken from the patient is different in that its bonds have been severed.  But if there is an area for debate, that is, if NRDC was not looking at this question and there is some room for judgment about the question of what constitutes an artificial state of affairs in this context, you say one looks to Europe and the United Kingdom as a relevant consideration in developing the law.  In terms of our trading partners outside the United States and Europe ‑ ‑ ‑

MR SHAVIN:   We have not looked at China, for example.  There is no evidence before the Court, and we certainly have not turned our mind to a relatively new Chinese Patent Act – in fact, I understand the Australian office was instrumental in helping the Chinese establish their Patent Office – but I am ‑ ‑ ‑

FRENCH CJ:   Or Japan or any of our regional trading partners.

BELL J:   Korea.

MR SHAVIN:   Yes, we have not looked at their treatment – again, perhaps because the common law development, which your Honour reminded us of in Apotex, has tended to be a common law development from the UK, from Canada, from Europe, and from the United States.  Certainly, our patent law development has concentrated on those jurisdictions in looking for authority and precedents.

BELL J:   Is the position now that Canada has some litigation pending, consequent upon the Myriad United States Supreme Court decision?

MR SHAVIN:   Our friends mentioned it in their submissions, I am reminded.  Yes, I think, is the short understanding.  There is perhaps a close relationship in Canada at times.

BELL J:   Canada has tended to follow the United States.

MR SHAVIN:   To some extent, yes.  We looked at the United Kingdom in particular, of course, because it was the Statute of James that is the foundation of this.  Thus, your Honour is right in identifying what is artificial, but we do remind the Court that we do not confine ourselves to the chemical change - that is, chemical, structural, functional.  Unless there is any further way in which we can assist the Court, those are our submissions.  May it please the Court.

FRENCH CJ:   Thank you, Mr Shavin.

MR SHAVIN:   I am sorry ‑ my learned friend provided the Court with a copy of the explanatory memorandum for raising the Bar, and could I simply – there is one reference to America and two references to Europe.  We are not doing a numerical thing, but at page 47 of the explanatory memorandum, in a discussion of…..make the requirement to describe the invention fully, which was a provision in section 40 to which I referred the Court very briefly yesterday afternoon, it is said in the third‑last paragraph:

The item is intended to modify the wording of paragraph 40(2)(a) of the Act so as to require enablement across the full width of the claims, while adopting language that is consistent with that used in other jurisdictions.  The wording in the amendment is similar to s 14(3) of the UK patents legislation, which has been interpreted as imposing this requirement.  The wording is also similar to art 83 of the European Patent Convention, which has been interpreted with a similar effect.  The intention is that paragraph 40(2)(a) be given, as close as is practicable, the same effect as the corresponding provisions of UK legislation and the European Patent Convention –

and in dealing with fair basis on page 49:

This item is intended to align the Australian requirement with overseas jurisdictions’ requirements (such as the UK).  Overseas case law and administrative decisions in respect of the ‘support’ requirement will be available to Australian courts and administrative decision‑makers to assist in interpreting the new provision.

I apologise to the Court for omitting a reference to that.  It was simply to make good the proposition that we said yesterday that in raising the bar, not exclusively as my friend will be able to show in reference to utility, the concept of finding utility, the legislation looks to the United States.  But, in looking at section 40, there is a strong direction to look to Europe.  May it please the Court.

FRENCH CJ:   Thank you, Mr Shavin.  Yes, Mr Catterns.

MR CATTERNS:   May it please the Court.  I plan to be brief, of course.  Your Honours, just in point form, his Honour Justice Nicholas, the primary judge, at paragraph 71 – I do not need to take the Court to it – at appeal book 621 accepted our submission that there was no distinction between “encode” and “code for” and the Full Court, as your Honours saw yesterday, had a different point of view.

Your Honours, the question that was discussed this morning in relation to utility, first her Honour Justice Gordon is right, there was no pleading in terms of section 18(1)(a) not useful in that sense.  The argument about economic utility arose because that is the phrase that is used by the High Court in NRDC at page 277 and, your Honours, we accepted that there is utility in this because you can use it to compare.  Of course it is not useful per se in the sense that one sells it in a bottle and we always ran, as your Honours can see from the judgments, the argument that these claims which did not have a practical application were different from the other claims.

What gives the invention its economic utility is that the claimed sequence of nucleotides and nucleic acid is relevantly identical to the natural sequence with its mutations, and that character or that characteristic does not change.  Just by way of reference, your Honours, Dr Suthers discussed that in some detail at appeal book 131 to 134. 

Your Honours, the useful effect of these particular claims before we move to applications is the state of knowledge that the Full Court referred to in paragraph 8.  There is one other aspect of our argument referred to by the Full Court at paragraph 188 in the same topic, your Honours.  I am sorry, I have not written down the page, page 702.  Your Honours have seen this argument many times that we rely on the isolated nucleotide possessing the code but the last three lines:

She accepts that, as isolated, it is useful in various ways but says that that use is based on the same code, so that, ‘in that sense’ it is the same –

Your Honours, our friend referred this morning to paragraphs 73 to 78 of the primer which were based on the last few paragraphs of Professor Brown’s evidence.  We gave the reference yesterday in our oral submissions paragraph 11 to the transcript at pages 95 to 96 where I cross‑examined him about those paragraphs which matched the paragraphs of the primer.  In each case, the proposition that he accepted was those uses depend upon the possession of the right code, namely, the natural coding sequence, those references in our paragraph 11 where we handed up yesterday, your Honours. 

As we are searching for a normative principle as his Honour the Chief Justice discussed up to paragraph [50] of Apotex, the inventors here have not made the sequence with the mutations.  The central characteristic of this claim coding for the mutated polypeptide having the sequence has not been conferred by the inventors.  It is not a product of human artifice, your Honours, and that, we submit, is the central problem.

Just to answer the question about our pleading, I think her Honour Justice Kiefel raised, the difference between paragraphs 15 and 16, your Honours, is in Philips v Mirabella the Court followed a route of analysis from the chapeau to section 18 which uses the word “invention” to the definition.  So paragraph 15 of our pleading was directed at section 18(1)(a) itself and paragraph 16, we do not think there is any difference here.  Paragraph 16 pleaded the Philips route via the chapeau to the definition.

Your Honours, in some discussion with matters raised by his Honour Justice Nettle in particular, we respectfully disagree that this is not a question of a disassembly and reassembly of the sequence of nucleotides, and may we just remind your Honours of the passage at the top of page 41 of the book where our friend was cross‑examining Dr Suthers about that.  His Honour Justice Nicholas quotes that passage and discusses that at paragraphs 73 and 74. 

When it is isolated, as Professor Rasko explained, you end up with a suspension of purified DNA in a salt solution – sodium chloride solution.  It will be of various lengths, many of which – millions of which – will be sequences of 15 nucleotides or longer, some of which will have the mutations that – or not the mutations - by the relevant codon which is either mutated or not.  That is what is natural.

Your Honours, there were some references yesterday to – non‑pejoratively – whether or not this was a jumped‑up or a contrived method claim.  His Honour Justice Gummow in the Rescare v Anaesthetic Supplies Case (1992) 111 ALR 205, discussed a submission that a product claim there – which was the claim for the mask used for sleep apnoea, was a “disguised method claim”.

This is a product claim, we readily accept.  The point is not to be pejorative about it, from our point of view, your Honours, but as the US cases such as Bilski and Alice that we have referred to, you cannot convert what is not patentable, for the reasons we have submitted, into something that is patentable by an artifice of drafting.

Your Honours, there is another area of discourse similar to that which is the discourse of a product by a process, and previously in English law you could – it was, in effect, a separate category.  It so happens that in Kirin‑Amgen ‑ and just giving your Honours the reference to a case we have looked at already – in (2005) RPC 9 at paragraphs 86 to 101, Lord Hoffmann discusses in the context of novelty product by a process and says that unless the process defines the nature of the product it does not add anything to novelty, it is just a product.

Your Honours, I think our learned friend slipped in relation to the chronology of Kirin‑Amgen versus the implementation in the UK of the European Directive.  It was implemented in July 2000.  Kirin‑Amgen was decided in October 2004. The first instance hearing was in February 2002 – that is in (2002) RPC 43 – so Lord Hoffmann wrote the passages we took the Court to after the directive had been implemented.

The passages that our friends referred to at paragraphs 18 to 20 were referred to by his Lordship in the context of the question ‑ sorry, of construction of the claims.  Your Honours, we respectfully submit that the rejection of a Private Members’ Bill and the ALRC comments which included pointing out that the retracted arguments against the patenting of genes do not carry this present question for the Court much further.

Subsequent amendments to different provisions, in some cases invoking America, in some cases invoking Europe, as our learned friend fairly mentioned this morning, hardly help on the construction of section 18(1)(a) particularly given the way his Honour the Chief Justice explained it, the invocation of a common law type question by the NRDC approach. 

So, your Honours, we respectfully submit it is an oversimplification to say that the (Raising the Bar) Act has led to a Europeanisation of Australian law.  The passages that are in the explanatory memorandum, without going to them, are replete with references to “our trading partners”, including specifically to the UK and including, for example, on utility to the US.

Just a couple of more points, your Honours.  The Philips Case dealt with the first of the two elements of the question of manner of manufacture that we submitted yesterday were discussed in NRDC.  The first is the Microcell point, mere new use of old thing.  In Philips it was the mere use – a new use of the well‑known phosphors in compact lamps - that was the topic there – versus the topic that is relevant to us today which is the very concept of a manufacture.

Your Honours, just one not very large addition to the answer to her Honour Justice Bell ‑ New Zealand continues to invoke section 6 of the Statute of Monopolies and follows the NRDC Case.  We have put that in our written submissions.  Your Honours, we respectfully submit that the inventors here did not invent this sequence.  It is not a result of their artifice, and it is not patentable.  May it please the Court.

FRENCH CJ:   Thank you, Mr Catterns.

MR SHAVIN:   Would the Court allow me just to clarify one thing?  The patent in Kirin‑Amgen had a priority date of December 22, 1978, which appears at page 179 of the report in paragraph 4, and the directive and the amendments to the UK legislation were not retrospective.  Of course, the discussion in 2004 was dealing with the law relevant at the priority date of the patent.  May it please the Court.

FRENCH CJ:   Thank you, Mr Shavin.  The Court will reserve its decision.  The Court adjourns until 9.45 tomorrow morning for pronouncement of orders.

AT 11.37 AM THE MATTER WAS ADJOURNED