Pfizer Inc v Commissioner of Patents
[2004] NZCA 104
•28 June 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA22/03
BETWEENPFIZER INC
Appellant
ANDCOMMISSIONER OF PATENTS
Respondent
Hearing:9 and 10 February 2004
Coram:Anderson P
Glazebrook J
Hammond J
William Young J
O'Regan JAppearances: A H Brown QC and G F Arthur for Appellant
B W F Brown QC and D A Laurenson for Respondent
Judgment:28 June 2004
JUDGMENTS OF THE COURT
Judgments
PARA NO
ANDERSON P [1]-[8]
Glazebrook, William Young and O’Regan JJ [9]-[94]
Hammond J [95]-[134]
ANDERSON P
[1] This Court held in Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385 that a patent may not be granted under the Patents Act 1953 for a method of treating disease or illness in human beings. That view was conventional. It conformed with English jurisprudence which had its roots in the Statute of Monopolies 1623 (21Jac 1,c3), s6 of which is imported by reference into the New Zealand statute.
[2] The Jacobean statute may have been more aptly named the Statute against Monopolies, for its elemental purpose was to proscribe the royal grant of monopolies; but consistent with an appreciation that it is in the public interest to encourage inventiveness and the dissemination of knowledge the statute accepted “any manner of new manufactures” provided “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”. A monopoly could be granted by letters patent and grants of privilege for a term of up to 14 years “to the true and first inventor and inventors of such manufactures”.
[3] Over the past four centuries public interest has led the Courts to expand the concept of “manner of new manufactures” to connote almost any new discovery outside the ambit of the s6 proviso. The meaning of s6, and therefore the patentability of a discovery, is a matter of evolved judicial interpretation. The juridical basis for the exclusion of methods of medical treatment lies therefore not in a narrow reading of the ancient statute but in the historical and conceptual connotations of its judicial exposition. As the High Court of Australia explained in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 at 269:
The inquiry which the definition demands is an inquiry into the scope of the permissible subject matters of letters patent and grants of privilege … it is an inquiry not into the meaning of a word so much as into the breadth of the concept which the law has developed by its consideration of the text and purpose of the Statute of Monopolies.
[4] Although methods of medical treatment were considered incapable of being patented, the use of a known compound for a recognised inventive purpose evolved into what is known as a Swiss claim. The purpose of such claims is to accord, for socially utile reasons, a monopoly which permits the economic exploitation of an intellectual discovery without constraining its potential for use once paid for. The device rewards the discovery of a new use for a known substance by protecting manufacture for that use. New Zealand patent protection for such claims was recognised by this Court in Pharmaceutical Management Agency Ltd v Commissioner of Patents [2000] 2 NZLR 529 (Pharmac).
[5] It might reasonably be thought that a monopoly of manufacture for a specific use would satisfy an inventor without a monopoly of the use itself. One might ask why a product, applicable to a specific use, might have to be bought not only for the sake of possession but paid for again when used for the very purpose for which it was made and bought. Whatever the esoteric rationalisation of such a hope might be the bedrock of justification must be and is the public interest. To which end the received law of New Zealand has been that however the facilitation of the method may have been rewarded with a monopoly, the employment of the method itself will not also be monopolised when it is conceived in terms of a method of treating disease or illness in human beings. This principle was clearly recognised by this Court in Pharmac at paragraph [64]:
Where the new properties are employed in a method of treatment, claims cannot extend to that method.
[6] Notwithstanding the recency of the Full Court’s decision in Pharmac, affirming that methods of medical treatment for humans cannot be patented, the appellant asks the Court, now, to come to the opposite conclusion. The facts and issues in this appeal are described with particularity in the judgment now delivered by O’Regan J. But amongst the appellant’s grounds are submissions that in Pharmac the Court expressed doubt whether the juridical basis for non-patent ability was the “generally inconvenient” proviso in s6 Statute of Monopolies. Further, that Pharmac overruled Wellcome to the extent that the latter case held that methods of medical treatment cannot be considered an invention. As to the first of those submissions, the issue is discussed in the other judgments now delivered. The latter submission is rejected.
[7] For the reasons expressed in the judgments by Hammond and O’Regan JJ, this Court once more unanimously holds that in terms of the present law, methods of medical treatment of humans are not patentable. Such methods may be inventions, but in terms of longstanding authority it is generally inconvenient to protect them with letters patent or grants of privilege. We add this caveat, however: we envisage little if any scope for exclusion, on such a basis, of inventions other than methods of medical treatment of humans.
[8] In the result the appeal is dismissed. The appellant is ordered to pay the Commission’s costs, in the sum of $12,000, together with reasonable disbursements as fixed, if necessary, by the Registrar.
GLAZEBROOK, WILLIAM YOUNG AND O’REGAN JJ
(DELIVERED BY O’REGAN J)Table of Contents
PARA NO.
INTRODUCTION [9]
PFIZER’S PATENT APPLICATIONS AND THEIR HISTORY [10]
THE LEGISLATION [13]
THE ENGLISH CASES [16]
THE WELLCOME CASE [21]
THE PHARMAC CASE [28]
THE DECISION OF ELLIS J IN THIS CASE [33]
THE ARGUMENTS OF PFIZER AND THE COMMISSIONER [35]
OVERVIEW OF THE ISSUES PRESENTED BY THE APPEAL [41]
DID PHARMAC OVERRULE WELLCOME? [42]
SHOULD THE COURT OVERRULE WELLCOME?
GENERAL [44](A) REPEAL OF S51 [48]
(B) THE PHARMAC CASE: SECTION 6 OF THE STATUTE OF MONOPOLIES [51]
(C) THE PHARMAC CASE: “INVENTION” DEFINITION [59]
(D) SECTION 17(1) [65]
(E) NO SPECIFIC EXCLUSION [67]
(F) SITUATION IN AUSTRALIA [72]
(G) 1994 AMENDMENTS [77]
EVALUATION [80]
SHOULD THIS COURT ACCEPT PFIZER’S PROPOSED DISCLAIMER? [86]
CONCLUSION [94]Introduction
[9] This is an appeal by the appellant, Pfizer Inc, from a judgment of Ellis J in the High Court (Re Pfizer Inc, HC WN AP257/2000 30 August 2002). In that decision, Ellis J upheld the refusal of the Assistant Commissioner of Patents to grant patents to Pfizer for methods of medical treatment on the basis that, under New Zealand law, methods of treatment of disease or illness in human beings are excluded from patentability. We will call this the medical treatment exclusion. Pfizer says there is no longer any basis for the medical treatment exclusion. It asks this Court to determine that methods of medical treatment may be patented in New Zealand.
Pfizer’s patent applications and their history
[10] Pfizer filed two patent applications in 1997 and 1998 which, under the Patent Co-operation Treaty, were entered as New Zealand patent applications on 7 October 1998. The applications both relate to methods of medical treatment of psychotic disorders using a new compound. The examiner reported in respect of each application that certain claims “do not appear to relate to an invention as defined under s2 as they relate to a method of treating humans”.
[11] Pfizer then asked for a hearing in the Intellectual Property Office of New Zealand (IPONZ). The hearing was before the Assistant Commissioner Mr Popplewell. He issued his decision on 27 October 2000. He found that the claims relating to methods of medical treatment of humans were “not allowable on policy (moral) grounds (s17(1))” and declined to accept the specification in the form in which it was submitted.
[12] Pfizer then appealed to the High Court, and, when that Court upheld the Assistant Commissioner’s decision, appealed again to this Court.
The legislation
[13] The relevant legislation is the Patents Act 1953 (the Act) under which patentability turns on the definition of invention set out in s2(1):
Invention means 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.
[14] Section 6 of the Statute of Monopolies 1623 sets out an exception to the Statute’s prohibition of monopolies. It says (in modern English):
Provided also and be it declared and enacted, that any declaration, before-mentioned, shall not extend to any letters patent and grants of privilege for the term of fourteen years, or under, 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 others at the time of making such letters patent and grants 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. The said fourteen years to be accounted from the date of the first letters patent of grants of such privileges hereafter to be made, but that the same shall be of force as they should be, if this act had never been made, and of none other.
[15] Other provisions of the Act are sometimes cited as being relevant in this context, particularly s17 and the former s51, which was repealed in 1992. To the extent to which it is necessary, we will refer to these sections later in this judgment.
The English cases
[16] The Patents Act was closely modelled on English legislation, though the English legislation has since been updated. This means that English cases on the definition of “invention” have had a significant influence on the development of this area of the law in New Zealand. The line of English authorities in this area starts with Re C & W’s Application for a Patent (1914) 31 RPC 235. In that case, the Solicitor General declined a patent for a method of medical treatment on the basis that the method of treatment did not amount to a “form of manufacture of trade”. This meant that it did not come within a meaning of “manner of new manufactures” in s6 of the Statute of Monopolies and was therefore not an “invention” as defined in both the UK legislation at the time and in the Act. Subsequent jurisprudence, particularly the decision of the Full Court of the High Court of Australia in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (the NRDC case) has developed the understanding of the law relating to method of new manufacture in a way which means it is no longer possible for that to form the basis of the medical treatment exclusion.
[17] Later English decisions confirmed the medical treatment exclusion, even though the basis for the decision in Re C & W’s Application for a Patent had become questionable. Various bases were put forward for the medical treatment exclusion in later cases.
[18] In Schering AG’s Application [1971] RPC 337, the Patents Appeal Tribunal referred to s41 of the Patents Act 1949 (UK), which was the equivalent of s51 of the Act. Those sections provided for compulsory licensing of patented medicines. The Tribunal suggested that the omission of reference to methods of medical treatment in UK s41 demonstrated that the UK Parliament had proceeded on the assumption that a patent could not be granted for a process for medical treatment. Section 51 of the Act has been repealed now, so this argument has no ongoing significance in the New Zealand context, except that the repeal has been advanced by Pfizer as a basis for reconsideration of the continuing justification for the exception.
[19] In Eli Lilly & Company’s Application [1975] RPC 438, the Patents Appeal Tribunal referred to long established practice against the grant of patents for methods of medical treatment, noting that the practice was “based on ethics rather than logic”. The Tribunal said that the medical treatment exclusion had its legal justification in s6 of the Statute of Monopolies, and, in particular the “generally inconvenient” exception. That observation echoed a similar comment made by Barwick CJ in the Australian case, Joos v Commissioner of Patents (1972) 126 CLR 611, 623.
[20] In Upjohn Company (Robert’s) Application [1977] RPC 94, the English Court of Appeal again found that a method of medical treatment was not patentable, on the basis that a method of medical treatment was not capable of being an invention under the UK Patents Act.
The Wellcome case
[21] The issue first came before the New Zealand Courts for decision in Wellcome Foundation Ltd v Commissioner of Patents [1979] 2 NZLR 591. In the High Court, Davison CJ held that a process for the medical treatment of a human disease was patentable under the Act. Davison CJ considered whether methods of medical treatment fell within the definition of invention under s2(1) of the Act. He concluded that methods of medical treatment fell within the broad meaning of the phrase “manner of new manufacture” as it appears in s6 of the Statute of Monopolies. He also held that there was no further bar to a method of medical treatment falling within the statutory definition of invention and no other adequate basis for holding such a method unpatentable.
[22] On appeal, this Court reversed the decision of Davison CJ and reinstated the decision of the Commissioner of Patents: Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385. The Court determined that a patent may not be granted in New Zealand under the Act for a method of treating disease or illness in human beings. The decision followed the decision of the English Court of Appeal in Upjohn Company (Robert’s) Application.
[23] Cooke, McMullin and Somers JJ each gave a separate judgment.
[24] Cooke J viewed the resolution of the issue as a balancing exercise, with the national economic interest at its heart. He acknowledged that “the archaic language of the Statute of Monopolies 1623 does not lend itself in modern times to the test of what is fairly embraced or in accord with the natural and ordinary meaning”. But he said that in the present context, his judgment must turn on the history of the interpretation of that Statute. Cooke J concluded that he could not realistically close his eyes to the possibility that, in the language of the Statute of Monopolies, the change sought by the respondent might result in “raising prices of commodities at home” or be “generally inconvenient”.
[25] McMullin J was content to follow existing English cases which were against the patentability of methods of medical treatment.
[26] On the question of s6 of the Statute of Monopolies, Somers J also found that the embargo on patents “generallie inconvenient” (to use the archaic language of the Statute of Monopolies) still informed the law. He acknowledged that the legal ancestry of the medical treatment exclusion was disputed but described Re C & W’s Application as “no more than a case in which the first articulation of the proposition can be seen”.
[27] Cooke, McMullin and Somers JJ joined in concluding that, given that the medical treatment exclusion was well established, the issue was properly one for the legislature.
The Pharmac case
[28] A related issue arose for consideration by this Court in Pharmaceutical Management Agency Ltd v Commissioner of Patents [2000] 2 NZLR 529 (the Pharmac case). That case concerned whether the Act permitted the Commissioner of Patents to grant a patent for a “Swiss claim”.
[29] The device of the Swiss claim was created in order to overcome rules prohibiting the patenting of methods of human treatment, particularly Article 52(4) of the European Patent Convention. Such a claim is typically for the use of a particular compound in the manufacture of a medicine for the treatment of a particular medical condition. As Gault J said in giving the judgment of this Court in Pharmac at para [17], the Swiss form of claim has been devised to avoid claiming the method of treatment, but to secure protection for use of the known compound in the preparation of a medicament for the new medical use. One of the policy concerns about patentability of methods of medical treatment is the potential exposure to infringement proceedings of medical practitioners administering medicaments. By constructing the claim so as to refer to the purpose for which the medicament is made, the applicant is able to invoke the novelty of the new use without claiming a method of treatment. This means medical practitioners and others who administer the medicament can do so without infringing the patent, but the patent holder can prevent others manufacturing the medicament for the particular purpose.
[30] In Pharmac, this Court held that Swiss claims could be inventions under the Act as they met the requisite standards of invention and novelty. A Swiss claim could therefore be the subject of a patent.
[31] The wider question of the patentability of methods of medical treatment was not before the Court in Pharmac. However, as Swiss claims were conceived as an exception to the general prohibition, the medical treatment exclusion was discussed. Gault J addressed the status of the proviso to s6 of the Statute of Monopolies in New Zealand law at para [20]. He noted that there was doubt whether the requirement in s6 that a matter of new manufacture “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” formed part of the definition of “invention” in s2 of the Act.
[32] Gault J later commented that the medical treatment exclusion was now supported only on ethical grounds (para [26]) and concluded on this point at para [29]:
What emerges from this is that it no longer can be said that a method of treating humans cannot be an invention. To the extent that the judgments in Wellcome express that view we depart from them. The exclusion from patentability of methods of medical treatment rests on policy (moral) grounds.
The decision of Ellis J in this case
[33] In the judgment under appeal, Ellis J upheld the decision of the Assistant Commissioner of Patents to refuse to accept an application for a patent for a method of medical treatment. The Assistant Commissioner based his decision on the grounds that certain claims were “not allowable on policy grounds”. This decision was challenged on the basis that the rule established by Wellcome had been overruled in Pharmac. Ellis J cited extensively from the judgment of Gault J in Pharmac and concluded at para [9]:
It could be said that as far as Swiss claims are concerned, Pharmac did overrule Wellcome and that is what Gault J said at para [39]. While some of the passages contain sentences which could be taken to be at complete odds with Wellcome, that is not the way I read the decision as a whole.
[34] Ellis J held that s6 of the Statute of Monopolies is part of the definition of invention in s2(1) of the Act. His conclusion was that the s6 proviso operates as an internal check on the subject matter that falls within the definition of invention itself. At para [10] Ellis J stated:
The true position in my view is that the combined definition in reality not only defines an invention but also limits the patentability of one. These limits are where the invention is contrary to law, mischievous to the state by raising prices of commodities at home or hurt [of] trade, or generally inconvenient.
The arguments of Pfizer and the Commissioner
[35] Counsel for Pfizer, Mr Andrew Brown QC, submitted that the decisions of both the Assistant Commissioner and Ellis J were wrong. In effect Pfizer contended that there is no longer any basis for the medical treatment exclusion. It contended that the Assistant Commissioner and the Court cannot refuse to accept a patent claim on moral or ethical grounds, but rather must have a lawful ground of objection founded in the Act.
[36] Pfizer argued that there is no longer any basis for the medical treatment exclusion as outlined in the judgments in this Court in Wellcome. In particular, it pointed to the following developments:
(a) The 1992 repeal of s51 of the Act;
(b) The observation in the judgment of this Court in Pharmac that it is doubtful that the Commissioner can refuse an application under the “generally inconvenient” proviso in s6 of the Statute of Monopolies;
(c) The recognition by this Court in Pharmac that methods of medical treatment are an “invention” under the Act, specifically overruling Wellcome on that point;
(d) The amendment to s17 of the Act in 1994 and the fact that s17(1) does not provide a statutory basis for the medical treatment exclusion;
(e) The recognition by this Court in Pharmac and by the Ministry of Economic Development in recent reform proposals that the Act contains no specific exclusion for methods of medical treatment;
(f) The fact that appellate courts in Australia have found under comparable legislation that methods of medical treatment claims are within the definition of invention and are patentable;
(g) The fact that the 1994 amendments to the Act, which were designed to ensure that New Zealand complied with its obligation under the GATT Agreement on Trade–Related Aspects of Intellectual Property Rights (the TRIPS Agreement), did not include amendments to prevent the patenting of methods of medical treatment as was specifically permitted under Article 27:3 of the TRIPS Agreement because the Government’s policy at that time was not to have any exclusion from patentability.
[37] Pfizer therefore submitted that, consistently with the judgment of this Court in Pharmac, it is appropriate for this Court now to overrule Wellcome and to find that methods of medical treatment are patentable. It argued that such a conclusion would logically follow from the finding in Pharmac that methods of medical treatment are an invention under the Act.
[38] So Pfizer’s case is that its patent applications should have been upheld in their original form. But it also put forward an alternative proposition. Pfizer offered to include in each of its patent applications a disclaimer of suit against any medical practitioner. This is designed to protect medical practitioners administering medicaments which would have the benefit of such a patent to avoid the obvious policy concern that medical practitioners should not be exposed to liability for patent infringement. In that respect, Pfizer drew particular attention to the suggestion in this Court’s judgment in Pharmac (at para [65]) that a logical approach would be to permit claims to extend to the method of treatment using the compound or composition but to require from the patentee a disclaimer of any right to sue the practitioner.
[39] Mr Brendan Brown QC for the Commissioner of Patents said the Commissioner accepted that it was settled by this Court in Pharmac that a method of medical treatment is capable of being an invention. However, he said the Commissioner contended that the medical treatment exclusion recognised in the Wellcome remained good law and Wellcome was not overruled by, but was affirmed in, Pharmac.
[40] He further argued that the Court should not overrule Pharmac and hold methods of medical treatment to be patentable, whether with or without the covenant proposed by Pfizer. He said that the Court was being asked to make a policy decision involving commercial, economic, ethical and social considerations outside everyday experience and knowledge of the Courts and that it should leave the matter to Parliament.
Overview of the issues presented by the appeal
[41] We propose to discuss the appeal by reference to the following headings:
(a) Did Pharmac overrule Wellcome?
(b) Has the reasoning in Wellcome been undermined by Pharmac and other developments to the point where this Court should, as a matter of policy, overrule Wellcome?
(c)Should this Court accept Pfizer’s proposed disclaimer?
Did Pharmac overrule Wellcome?
[42] Pfizer did not argue in this Court that the Wellcome decision was overruled in Pharmac, though it had made such an argument in the High Court, and in its points of appeal filed in this Court. Rather, Pfizer argued that there is no longer any logical basis for the Wellcome decision.
[43] In our view Pfizer was correct to abandon the argument that Pharmac overruled Wellcome. It is clear from a reading of the Pharmac decision that it did not do so. Pharmac was a case considering the patentability of Swiss claims. As indicated earlier in this judgment, the Swiss claim was a device created to overcome rules prohibiting the patenting of methods of human treatment. If Pharmac had been deciding that methods of medical treatment of humans were patentable, then the whole basis for consideration of Swiss claims would have disappeared. It is also clear that the Court in Pharmac was confining its observations to Swiss claims. For example, in para [39], the judgment records that counsel for Pharmac suggested that the Court should not extend the law of patentability in relation to the claims made in that case because it was a matter best left for Parliament. The Court’s response to this was:
While that would have much greater force were we to contemplate departing from the Wellcome decision and deciding claims for methods of medical treatment should be allowed, it is of less weight on the narrower question as it has been distilled.
Should the Court overrule Wellcome?
General
[44] We now turn to the submissions made on behalf Pfizer that developments since the time of the Wellcome decision have removed the rationale underpinning that decision. We undertake that exercise from a starting point that this Court’s decision in Wellcome is the law, and has been the law for over 20 years. While the legal analysis underpinning the decision has been questioned, this Court will need to be satisfied that subsequent developments have been of sufficient significance to justify departing from an earlier decision which has governed this area of the law for such a long period.
[45] Mr Andrew Brown said that the inexorable logic of the reasoning in Pharmac is inconsistent with Wellcome. He based that contention on what the Court said in para [64] and [65] of the judgment in Pharmac, in which the Court stated:
[64] Just as there can be invention and novelty in the discovery of unrecognised properties in known substances qualifying for patent protection under the doctrine of selection patents and under the decision in NRDC [National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252], so there can be invention and novelty in the discovery of unrecognised properties of known pharmaceutical compounds. Where the somewhat special requirements for a selection patent are not met, a claim to the substance per se should not be available. Where the new properties are employed in a method of medical treatment, claims cannot extend to that method. But by its accession to the TRIPS Agreement New Zealand has undertaken to make available patents “for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application”: (Art 27:1). That obligation, which has been assumed by all parties to the agreement, is not to be set aside on grounds based on circumstances of convenience such as the comparatively low level of medical research undertaken in this country or the particular method by which medicines are funded.
[65] Once it is accepted that there can be new invention in the discovery of previously unrecognised advantageous properties in a chemical compound, the obligation to make patent protection available must apply. The provisions of the Patents Act should if possible be construed so as to give that effect. The judge-made rules relating to novelty and methods of treatment, unless dictated by the statute, should be modified if that is necessary. Bearing in mind the rationale for the method of treatment exception permitted under TRIPS, Art 27:3, – that there should be no interference with the medical practitioner’s diagnosis and treatment of patients – perhaps the logical approach would be to permit claims to extend to the method of treatment using the compound or composition but to require from the patentee a disclaimer of any right to sue the practitioner. That would leave vulnerable as indirect infringers those providing the product for the purpose of that treatment: Innes v Short and Beal (1898) 15 RPC 449. Essentially the same situation will be achieved by allowing claims in the Swiss form. In such a claim the integer representing the inventive subject-matter and novelty is the new use for which the medicament is made. In this particular field where that cannot be captured with a method claim, we would accept the designation of purpose as sufficient. In this way the somewhat anomalous distinction between first and second pharmaceutical uses will no longer apply and the international obligation will be satisfied.
[46] Mr Andrew Brown said that, while the issue had not been finally determined in Pharmac because the Court there was considering only Swiss claims, it did now need to be determined because in this case the patent which is sought is for a method of medical treatment and it is not in this Swiss form.
[47] Mr Andrew Brown’s contention that the reasoning in Wellcome had been overtaken by subsequent developments was not confined to what was said in Pharmac. It is convenient to deal with his arguments by reference to each of the developments referred to by Mr Andrew Brown in his submissions (which we have set out in para [36] above), in the order in which they appear in that paragraph.
(a) Repeal of s51
[48] As stated earlier, s51 gave the Commissioner power to require the holder of a patent relating to food or medicine to grant a licence to any person applying to the Commissioner for such a licence. In settling the terms of the licence the Commissioner was required to endeavour to secure that food and medicine would be available to the public at the lowest prices consistent with the patent holder deriving a reasonable advantage from its patent rights.
[49] The omission from this section of any reference to methods of medical treatment was said to indicate that the legislature envisaged that methods of medical treatment must not have been patentable and that this supported non-patentability of methods of medical treatment. This argument was rejected by Davison CJ in his decision in Wellcome and it does not appear to have been a significant feature of the reasoning in this Court’s decision in Wellcome, though both McMullin J and Somers J mentioned it.
[50] Section 51 was repealed by the Patents Amendment Act 1992. We accept Mr Andrew Brown’s submission that the repeal of s51 removes the possibility of using that provision as a basis for deciding that methods of medical treatment are not patentable. But little reliance has been placed on the section in New Zealand. Accordingly, we see its repeal as being of little significance in the present context.
(b) The Pharmac case: section 6 of the Statute of Monopolies
[51] Mr Andrew Brown pointed to the statement in the judgment of this Court in Pharmac (at para [20]) that there is doubt as to whether the requirement in s6 of the Statute of Monopolies that a method of new manufacture “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” forms part of the definition of “invention” in s2 of the Act. That observation is based on a statement to that effect in Blanco White, Patents for Inventions (4th ed, 1974) para 1-212. In Pharmac, the Court commented that there was some support for that view in the fact that when the Act was passed in 1953 it included s17(1)(b) which gave the Commissioner power to refuse an application if it appeared to him that the use of the invention in respect of which the application was made would be contrary to law or morality. The authors of Frankel & McLay, Intellectual Property in New Zealand (2002) express doubt about that view at para 6.3.1, p 344.
[52] No doubt was expressed in either the Chief Justice’s judgment or the judgments in this Court in Wellcome that the whole of s6 of the Statute of Monopolies was incorporated into the definition of invention in s2 of the Act. For reasons we explain later, we do not believe that s17 empowers the Commissioner to decline a patent because the patent would be used for an immoral purpose but rather only if the invention for which the patent is sought would be used for such a purpose. That means that the enactment of s17 cannot be said to have replaced the “generally inconvenient” ground taken from the Statute of Monopolies. Despite the doubt expressed in Pharmac, we conclude that the whole of s6 of the Statute of Monopolies forms a part of the definition of invention in the Act.
[53] We suspect in any event that all Gault J meant when he made the remarks relied on by Mr Andrew Brown was that the Commissioner has no power to refuse a patent on the grounds that he considers it, for example, generally inconvenient on a basis not already part of existing case law, especially if that would be inconsistent with New Zealand’s obligations under the TRIPS agreement discussed below.
[54] Mr Andrew Brown derived further support for his argument as to the inapplicability of the “generally inconvenient” part of s6 of the Statute of Monopolies from the fact that New Zealand entered into the TRIPS agreement in 1994. Article 27 of that agreement provides:
Article 27 Patentable Subject Matter
1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.
2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.
3. Members may also exclude from patentability:
(a)diagnostic, therapeutic and surgical methods for the treatment of humans or animals;
…
[55] Mr Andrew Brown pointed to this Court’s judgment in Pharmac where the Court observed that the obligation undertaken by New Zealand in Article 27:1 “is not to be set aside on grounds based on circumstances of convenience such as the comparatively low level of medical research undertaken in this country or the particular method by which medicines are funded”.
[56] While we accept that the interpretation of the Act can be informed by New Zealand’s obligations under the TRIPS agreement, we are also mindful that Parliament amended the Patents Act in 1994 only to the extent that it was thought to be necessary to bring New Zealand into compliance with the TRIPS agreement. No change was made to the definition of “invention” in s2 (which incorporates by reference s6 of the Statute of Monopolies), even though, at the time of those amendments, the Wellcome decision was authority for the proposition that methods of medical treatment were not patentable (and one of the grounds on which that decision was based was the “generally inconvenient” wording incorporated into the definition of “invention”). It is notable that Article 27:3(a) specifically provides for exceptions for methods of medical treatment and it is possible that Parliament was content to leave the statute unamended in this regard, so that the exception which had applied as a result of the Wellcome decision continued to apply as Article 27:3(a) permitted.
[57] We acknowledge that a generalised exception to patentability based on inconvenience could, if broadly interpreted, create a wider exception to patentability than would be permitted under Article 27. However, we believe that Parliament would have amended the Act to make it clear that this exception did not apply if it had been thought necessary to do so in order to ensure compliance with the TRIPS agreement. In circumstances where the definition of invention in s2 of the Act is interpreted as preventing patentability of methods of medical treatment, there is no breach of Article 27 because of the explicit wording of Article 27:3(a). However, we consider that any interpretation of the definition of invention would otherwise have to be informed by New Zealand’s obligations under the TRIPS agreement.
[58] We therefore conclude that, notwithstanding New Zealand’s obligations under the TRIPS agreement, the definition of “invention” continues to incorporate the full text of s6 of the Statute of Monopolies. And we also conclude that the definition as it has been interpreted by the New Zealand Courts does not bring methods of medical treatment within the scope of inventions for which patent protection may be obtained.
(c) The Pharmac case: “invention” definition
[59] Pfizer also argued that the specific recognition by the Court in Pharmac that methods of medical treatment are an “invention” removed the remaining basis for refusal of patentability as outlined in the Wellcome decision.
[60] In our view, the observation made in Pharmac must be limited to the matters at issue in Pharmac. If the observation in Pharmac is read literally, it could be interpreted as indicating that, since methods of medical treatment are inventions, they are entitled to patentability. But it is clear that was not what the Court intended in Pharmac because, as we have already pointed out, the Court was careful not to overrule the general rule in Wellcome. As Ellis J said in the High Court in this case, the definition in s2 of the Act both defines an invention and limits the patentability of one. In our view, the Court in Pharmac was referring to the former aspect of the definition only.
[61] It needs to be recognised that the interpretation of s2 of the Act is an unusually complex exercise, because of the drafting device of incorporating, by reference, s6 of the Statute of Monopolies, rather than expressing Parliament’s intention in contemporary language. This has led to judicial interpretation which has sought to give meaning to the archaic words of s6 in a contemporary context. That in turn has led to this area of the law becoming focussed more on the judicial pronouncements on s6 of the Statute of Monopolies than on the archaic words of the section itself.
[62] This phenomenon was recognised by the High Court of Australia in the NRDC case. The Court said (at p 269):
It is of the first importance to remember always that the [equivalent Australian legislation] defines the word “invention”, not by direct explication and in the language of its own day, nor yet by carrying forward the usage of the period in which the Statute of Monopolies was passed, but by reference to the established ambit of s6 of that Statute. The inquiry which the definition demands is an inquiry into the scope of the permissible subject matter of letters patent and grants of privilege protected by the section. It is an inquiry not into the meaning of a word so much as into the breadth of the concept which the law has developed by its consideration of the text and purpose of the Statute of Monopolies. One may remark that although the Statute spoke of the inventor it nowhere spoke of the invention; all that is nowadays understood by the latter word as used in patent law it comprehended in “new manufactures”. The word “manufacture” finds a place in the present Act, not as a word intended to reduce a question of patentability to a question of verbal interpretation, but simply as the general title found in the Statute of Monopolies for the whole category under which all grants of patents which may be made in accordance with the developed principles of patent law are to be subsumed. It is therefore a mistake, and a mistake likely to lead to an incorrect conclusion, to treat the question whether a given process or product is within the definition as if that question could be restated in the form: “Is this a manner (or kind) of manufacture?” It is a mistake which tends to limit one’s thinking by reference to the idea of making tangible goods by hand or by machine, because “manufacture” as a word of everyday speech generally conveys that idea. The right question is: “Is this a proper subject of letters patent according to the principles which have been developed for the application of s6 of the Statute of Monopolies?”
[63] In the case of methods of medical treatment, the New Zealand courts have effectively answered that last question in the negative. In our view that has resulted from an assessment of the words of s6 of the Statute of Monopolies filtered through the process outlined in NRDC, and coloured in particular by the “generally inconvenient” wording in s6 of the Statute of Monopolies.
[64] The importance of case law in this area results from the flexibility that has, of necessity, been introduced into the exercise of statutory interpretation in this area of the law to accommodate the archaic language of s6 of the Statute of Monopolies. But the process is still a process of statutory interpretation, to determine the scope of the definition and the extent of patentability permitted under it. In our view the medical treatment exclusion does have a statutory base, and to the extent that the obiter observation in Pharmac may cast doubt on that, we would respectfully differ.
(d) Section 17(1)
[65] The next point made by Mr Andrew Brown related to s17 of the Act. As it was initially enacted, that provision empowered the Commissioner to decline registration if it appeared to him that the invention in respect of which the patent application was made would be “contrary to law or morality”. The provision was amended in 1994 so that it now applies only where the use of the invention in respect of which the application is made would be “contrary to morality”. Mr Andrew Brown said the amendment to s17(1) of the Act means that s17 no longer provides a statutory basis for the medical treatment exclusion.
[66] It is clear from the wording of s17 that it focuses on the use of the invention rather than the use of the patent for the invention. So it is hard to see how it could have been a basis for the medical treatment exclusion. Treatment of human beings is not of course immoral, though it may be argued that the patenting of such treatments, if the effect of the patent is to expose those administering the treatments to infringement actions, could be seen to be immoral. In our view, the amendment made to s17 has had no impact at all on patentability of methods of medical treatment. We say that because, although the amendment deleted references to “unlawful” use of inventions, it otherwise maintained the focus of s17 on the use of an invention for which a patent had been sought rather than on the use of the patent. Thus the amendment of s17 in 1994 does not have any significance to the present issue at all.
(e) No specific exclusion
[67] Pfizer submitted that both the Pharmac decision (at para [29]) and the reform proposals formulated by the Ministry of Economic Development have contained acknowledgements that there is no specific exclusion in the New Zealand legislation for methods of medical treatment. We have referred already to the observations made in Pharmac and recorded that, in our view, the medical treatment exclusion continues to apply.
[68] We received in this Court evidence from both parties of the officials’ advice provided to Ministers on changes to the Act resulting from New Zealand’s entry into the TRIPS agreement in 1994, and policy advice given to Ministers about more substantial amendments to the Act in 1992 and 2002. The 2002 advice includes observations by officials that the Act does not contain a specific prohibition on patentability of methods of medical treatment. Mr Andrew Brown attributed some significance to that observation but it seems to us to be no more than an acknowledgement that the prohibition has been based on Court decisions interpreting the legislation rather than on specific wording in the legislation itself. In that respect it is uncontroversial and does not have any significant impact on the present case.
[69] It is notable that the Cabinet decision taken in 2002 was to include in the Act a specific prohibition on patentability for diagnostic, therapeutic and surgical methods for the treatment of humans, thus making a specific statutory prohibition which would, in general terms, be to the same effect as the decision of this Court in Wellcome. That exclusion would take advantage of the permitted exclusion in Article 27:3 of the TRIPS agreement.
[70] We do not accept Pfizer’s submission that the decision of Cabinet to propose to Parliament legislation which would specifically outlaw patentability of methods of medical treatment supports the contention that this Court should overrule the decision in Wellcome. The proposal is simply to make specific what is now unspecific and to confirm Parliament’s intention that methods of medical treatment should not be patentable. We reject the submission that the Cabinet decision indicates that Parliament did not intend that the Act in its present form should exclude from patentability methods of medical treatment.
[71] We do not in any event find the policy papers submitted by the parties helpful in determining the issues before the Court in this case. Such papers do not normally assist a Court in determining the meaning of provisions in legislation. They have even less utility when they are called in aid to substantiate a submission about the significance of something not said in a statute.
(f) Situation in Australia
[72] Pfizer argued that the acceptance of patentability of methods of medical treatment in Australia supports its case that this Court should now overrule Wellcome.
[73] Mr Andrew Brown referred us to the decisions of the full Federal Court in Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 122 ALR 141 and in Bristol‑Myers Squibb Company v FH Faulding & Co Limited (2000) 170 ALR 439. In both cases, the Court concluded that patents could be granted for methods of medical treatment. The definition under review in both cases (from the Australian Patents Act 1990) is in similar terms to the definition in s2 of the Act. Those decision post-date the Wellcome decision in this Court and were made in the knowledge that the consequence was that the law of Australia would differ from the law of New Zealand in this respect. In both cases the Courts indicated a preference for the reasoning in the decision of Davison CJ in Wellcome to that in the decision of this Court in that case.
[74] In their judgment in Bristol-Myers at p444, Black CJ and Lehane J noted the desirability that, in important areas of commercial law, there should be consistency in the laws of the two countries but they nevertheless determined that it was appropriate to confirm and apply the earlier decision in Rescare. We share their view that, in matters of commerce, conformity in the law of the two countries may be a desirable policy objective but, in our view, it is not determinative in this context.
[75] We note that, in his judgment in the Bristol-Myers case, Finkelstein J made the following comment on the difficulty faced by a Court when asked to determine matters of policy in this area of law (at p481):
It is likely that few of the arguments admit of a definitive answer. The area of controversy is great. Public interest groups, medical and professional associations, medical scientists and the pharmaceutical industry, among others, would need to be approached and their views ascertained before a court could ever hope to arrive at a reasoned conclusion, if it could ever do so. Indeed a court might well be asked to take account of ethical and moral considerations to arrive at a decision. This is not the function of a court on an issue such as this. In my opinion, medical treatment and surgical process are patentable under the legislation and, if public policy requires a different result, it is for the Parliament to amend the 1990 Act.
[76] Of course the observation of Finkelstein J is made against a background of Australian case law allowing patentability of methods of medical treatment, but in our view it can equally be applied to the New Zealand situation where a Court is being asked to overrule case law which yields the opposite outcome.
(g)1994 Amendments
[77] Mr Andrew Brown argued that the amendments made to the Act in 1994 to bring New Zealand into conformity with the requirements of the TRIPS agreement did not include any specific provision taking advantage of the exception in Article 27:3 of the TRIPS agreement, and that this should be seen as a conscious decision on the part of Parliament not to exclude from patentability methods of medical treatment. He placed particular emphasis on the advice given by the Ministry of Commerce on options for reform in a paper dated July 1990 in which the Ministry advised that there should be no specific exceptions to patentability in the new legislation which was being proposed. He argued that the absence of any specific provision relating to non-patentability of methods of medical treatment indicated that Parliament intended that there should be no restriction on patentability.
[78] We repeat our concern about reliance on officials’ papers of this kind. Quite apart from that, Pfizer’s argument ignores the fact that the legislation which was eventually passed in response to the TRIPS agreement was very limited in scope, as was made clear in a paper to the Cabinet Committee on Enterprise Industry and Environment from the Minister of Commerce which preceded the introduction of the bill to the House. The controversy which had been engendered by earlier proposals for reform had not been resolved at the time that the TRIPS-related legislation needed to be passed. For that reason officials had advised the Minister that only changes which were strictly required by the TRIPS agreement should be implemented in 1994 and that other concerns should be dealt with in a more general intellectual property law reform bill, which officials anticipated would be introduced later that year. It appears that advice was accepted and the scope of the 1994 amendments reflects that. As it turned out, the reform legislation which was due to be introduced “later that year [1994]” has still not been introduced, though we were told by junior counsel for the Commissioner, Mr Laurenson, that its introduction is imminent.
[79] During the passage of the 1994 legislative amendments, an amendment was proposed by a back bencher which would have included in the Act a number of exclusions from patentability mirroring those in Article 27 of the TRIPS Agreement, including an exclusion for “diagnostic, therapeutic and surgical methods for the treatment of humans or animals”. The amendment was rejected. Mr Andrew Brown said this indicated a Parliamentary intention to permit patentability of methods of medical treatment. We disagree. The proposed amendment was addressed to a broader concern on the part of some submitters to the Select Committee considering the bill, particularly Maori, and the amendment was rejected because it was intended that those issues would be addressed in the (still awaited) general intellectual property reform bill. There is no basis for interpreting the rejection of the amendment as indicating any intention on the part of Parliament about the issue now before the Court.
Evaluation
[80] All of these heads of argument must, of course be addressed in the context of Pfizer’s broad contention that that patentability of methods of medical treatment was desirable and that we should overrule Wellcome (and Pharmac to the extent that it did not overrule Wellcome) for policy reasons. We accept that it would be open to us to do so, in the same way this Court accepted the patentability of Swiss claims in Pharmac. In support of its contention, Pfizer submitted affidavits from two prominent Australian medical practitioners and a prominent Australian patent attorney in support of this proposition. That evidence was to the effect that the patentability of methods of medical treatment in Australia has not led to any practical difficulties for medical practitioners administering medicaments in accordance with the patented method, and that no medical practitioner had faced infringement action.
[81] In response to this, the Commissioner submitted affidavits from representatives of medical organisations in New Zealand that expressed real concern about the possibility of methods of medical treatment becoming patentable in New Zealand.
[82] We accept Mr Andrew Brown’s submission that it is appropriate that there be a proper evaluation of the policy reasons for the medical treatment exclusion in the light of developments of the law in Australia, the TRIPS agreement, the decision of this Court in Pharmac and the ongoing reform process in New Zealand.
[83] However, our overall view (which is confirmed by the nature of the evidence led) is that reform of this area of the law is better undertaken through the Parliamentary process. This would allow proper consultation with medical professionals and other organisations as well as the commercial interests which favour patentability, and the formulation of considered reform proposals after that consultation process has taken place.
[84] As well, we do not accept the submission that circumstances have changed so significantly that this Court should now overrule Wellcome. The Wellcome decision has been the law for over 20 years and it followed a line of English authority going back to 1914. In effect, we are being invited to change the law and broaden the scope of the Act, with retrospective effect from the date of Pfizer’s applications. In our view, there is no proper basis for us to do so. As McMullin J observed in Wellcome (at page 398), the complexity of this area of the law and the policy choices required are matters which are best left to legislative reform.
[85] We therefore conclude that the ratio of Wellcome (that a method of medical treatment is not patentable) remains the law in New Zealand.
Should this Court accept Pfizer’s proposed disclaimer?
[86] As a further alternative Pfizer proposed that the patents for which it had applied in this case should be granted subject to an explicit disclaimer not to sue any medical practitioner.
[87] The form of disclaimer proposed by Pfizer is as follows:
“With respect to a medical practitioner’s performance of any act that constitutes an infringement of the [method of medical treatment claim] in the patent, the patentee foregoes the right to sue the medical practitioner in relation to that infringing act. This does not constitute a settlement or release by way of accord or satisfaction or a licence to use the method claimed in the [method of medical treatment claims] but is merely a covenant not to a medical practitioner for infringement of the [methods of medical treatment claims] in the patent.”
[88] Mr Andrew Brown submitted that there is a legislative basis for a disclaimer of this kind in s83(1) of the Act, which refers to the register of patents “in which there shall be entered particulars of patents in force and of such other matters affecting the validity or proprietorship of patents as the Commissioner thinks fit”.
[89] Pfizer submitted an affidavit by a prominent patent attorney, Mr Syddall, in which he deposed that it is not unusual for patents to be granted subject to specific disclaimers.
[90] Mr Andrew Brown submitted that allowing patentability subject to such disclaimer would be consistent with the suggestion outlined in para [65] of the judgment of this Court in Pharmac (which is set out in para [45] above), where this Court suggested that a logical approach would be to permit claims to extend to the method of medical treatment using the compound or composition but to require from the patentee a disclaimer of any right to sue the practitioner.
[91] We accept Mr Andrew Brown’s submission that Pfizer’s proposal is consistent with that observation in Pharmac, but in our view the observation was directed to the legislature and to officials considering reform proposals, not an indication of any intention by this Court to impose such an outcome in a future decision.
[92] Mr Brendan Brown submitted that there were inadequacies in the form of the disclaimer proposed. He contrasted it with the protection provided for medical professionals in s287(c) of the United States Patent Act 35 USC 287 which is considerably more detailed than the disclaimer proposed by Pfizer. He pointed to the concerns expressed by the representatives of medical organisations in New Zealand about the potential effect on their members and suggested that any decision to allow patentability subject to a disclaimer of this kind was more appropriately undertaken in a legislative context than in proceedings such as the present case.
[93] We accept that submission.
Conclusion
[94] We conclude that Ellis J was correct in his assessment of the Pharmac and Wellcome cases and properly concluded that the Assistant Commissioner was right to have excluded the claims to methods of medical treatment of human beings in the present case. We would therefore dismiss Pfizer’s appeal.
HAMMOND J
INTRODUCTION
[95] I agree that this appeal should be dismissed. In my view the present law in New Zealand is that claims to the medical treatment of human beings are, in general, not patentable. For public policy reasons, methods of medical diagnosis, therapy and surgery should be available to all participants in the medical profession and the public health system, and to the public.
[96] To the extent that the appellant seeks to have us read the present legislation differently, or change the law, I am quite unpersuaded by the arguments which have been advanced on its behalf. And the matters raised on the appeal are not just straightforward matters of statutory construction, but raise difficult and complex matters of public policy which should be reviewed - if there is to be a review - in the Parliament of New Zealand, and which are for that forum to resolve.
[97] O’Regan J has dealt with the arguments of statutory construction which were advanced to this Court. For myself, I do not find it necessary to re-traverse or comment further on those matters. I do think it useful however, to put the appeal in context, to explain how the present public policy dimensions arise and why they are not appropriate for curial resolution, even if it were thought appropriate to disturb the longstanding principle against the patentability of subject-matter of the character in issue before us.
The evolution of the present law in New Zealand
[98] The practice of granting monopolies by letters patent has a long history, which it is not necessary to go into fully here. (See generally, N Davenport The United Kingdom Patent System (1979); H Fox Monopolies and Patents: a Study of the History and Future of the Patent Monopoly (1947)). It suffices to say that prior to the establishment of the United Kingdom Patent Office in 1852 there was a period of something over 500 years in which patent monopolies were granted, quite often to inventors, but not always because they were inventors. It was precisely because there were gross abuses of that system that, after the famous Case of Monopolies (Darcy v Allein (1602) 11 Co Rep 846; which struck down a Royal monopoly on the manufacture of playing cards), the Statute of Monopolies 1623 (21 Jac 1, c3) was enacted. This statute restricted the Crown’s prerogative to grant patent monopolies to the extent that, while monopolies for new and useful inventions could be granted, unproductive monopolies for the benefit of Court favourites could not. The Statute of Monopolies declared all grants of monopoly rights to be void at common law, but excepted letters patent and grants of privilege in respect of any “manner of new manufacture”.
[99] Under the Patent Act of 1949 (UK) (on which the present New Zealand Act was substantially modelled) an invention, to be patentable, had to be a “manner of new manufacture, the subject of letters patent and grant of privilege within s6 of the Statute of Monopolies” (Patents Act 1949 (UK), s101).
[100] Under this statute, in order to ascertain whether something was a new “manner of manufacture”, courts asked the question, “is this a proper subject of letters patent according to the principles which have been developed for the application of s6 of the Statute of Monopolies?”
[101] In addressing that question English (and for that matter New Zealand courts) were faced with the task of paying due regard to the conflict between proper rewards for investors but without unreasonably fettering the freedom of third parties; and, in changing societal and industrial circumstances.
[102] New Zealand does not have an up-to-date Patent Act which is thought to be peculiarly appropriate to New Zealand’s particular needs and expectations. The current New Zealand statute, the Patent Act 1953, still essentially proceeds on the former English model.
[103] Under this traditional model of patent law, certain things were always said not to be patentable. For instance, a mere discovery was never proper subject matter for a patent. In Reynolds v Herbert Smith and Co Ltd (1903) 20 RPC 123, the distinction between a discovery and an invention was set out by Buckley J in these terms:
Discovery adds to the amount of human knowledge but it does so only … by disclosing something … invention also adds to human knowledge, but not merely by disclosing something. Invention necessarily involves also the suggestion of an act to be done, and it must be an act which results in a new product, or a new result, or a new process, or a new combination for producing an old product or an old result. (at 126)
[104] Likewise a claim could not be made for a monopoly of a natural principle, since that would be to claim something in the laws of nature, which have always existed. As it is often put, man or woman merely “discovers” the principle. On the other hand, if in addition to discovering the principle, the claimant could describe a method of utilising that principle so as to make it applicable to the production of a new manufacture, one could get a patent for the method. To this extent the claimant would be protected in the application of the principle itself (see e.g. Swift’s Application [1962] RPC 37).
[105] In a similar vein, a scheme or plan was not a manner of manufacture, it was a mere idea; but a mode of carrying a principle or idea into practical effect might well be patentable (IBM Corps Application [1980] FSR 564).
[106] These matters were, historically, along with the medical use exception, not explicit in the Statute of Monopolies. They were spelled out by judges, in actual litigation. And, however they were justified (and sometimes jurists disagreed on the precise reasoning), these things were considered simply not to be patentable, as being inherently unpatentable, not inventions, or generally inconvenient to mankind.
[107] There is nothing unusual in such a juristic phenomenon. For instance, in another field of intellectual property law - that of breach of confidence - for a long time there was a debate as to whether that doctrine rested on proprietary notions, implied terms, or equitable notions (see Hammond “The Origins of the Equitable Doctrine of Breach of Confidence” (1980) 9 Anglo-Am L R 7). But nobody doubted the existence of the underlying concept. In similar vein, historically, the exclusion of patents for medical treatment was not (until relatively recently) doubted.
[108] In the United Kingdom, even under the 1977 Act, an “invention” is still undefined. But the basic exclusions to which I have referred were explicitly carried forward into the new statute.
[109] Against this history, it will be apparent, as Mr Brendan Brown QC put it before us, that the present New Zealand statute is not a “Code”. Our Act is a curious amalgam arising out of very old and peculiar circumstances, which in turn arose out of the long history of Royal grants of privilege in the United Kingdom; then evolved through various statutory provisions; and which law was supplemented by the leading decisions of senior appellate courts which set out case law landmarks against which the law of patents had to be viewed.
[110] Given the already intrinsically challenging subject matters of patents, this background has not made the law readily accessible, or easy to understand. As Esher MR once observed, “a man had better … have anything happened to him in this world, short of losing all of his family by influenza than have a dispute about a patent” and, “by the voluminous shorthand notes we know: ‘Here is a patent case’” (Ungar v Sugg (1892) 9 RPC 113, 117). And it was the deplorably obscure state of the law which led Charles Dickens to write his, Poor Man’s Tale of a Patent (as to which, lawyers may well find Phillips Charles Dickens and the Poor Man’s Tale of a Patent (1984) of distinct interest). But it is precisely because of the unhappily technical character of patent law that in my view it is best to proceed - and it is certainly in the public interest to do so - wherever possible on the basis of clearly understood and articulated, basic principles. Patents after all are granted in the public interest - there is no other public policy justification for the monopoly - and it is only right that the public should understand as best it can be conveyed why it is that certain things are allowed, and others are not.
Patents on medical methods of treatment
[111] The term “medical treatment” is itself somewhere loose. For both functional and analytical purposes, it can usefully be broken out into diagnosis, therapy and surgery. This is the analytical scheme employed in the Patents Act 1977 (UK), s4(1).
[112] Until a quarter of a century or so, ago the received wisdom was that patent claims to any of these elements ought not to be supportable. One of two bases was commonly advanced to support that conclusion. First, the inherent patentability of methods of medical treatment was treated as turning on the black letter question of the nature of an “invention”. Secondly, behind that technical issue, in the view of some jurists, lay a very large moral and policy issue: whether, on the one hand, the undoubted public interest in encouraging research and innovation in the medical arena through patent incentives for the creation of new and therapeutic methods is outweighed, on the other hand, by the various public policy objections to permitting the monopolisation of those methods.
[113] These objections include such things as hindering medical research by restricting the free availability of knowledge; inconsistency with the ethical standards of medical practitioners and students; exposing medical practitioners who use and accept the use of a patented method without a licence to a liability for patent infringement; and enabling patentees to exact unreasonable payments for lifesaving or potentially lifesaving techniques (see, for a selection of the various views, Feros “Patentability of Methods of Medical Treatment” [2001] EIPR 79, 84-5; Gocyk-Farbr “Patenting Medical Procedures: a Search for a Compromise Between Ethics and Economics” (1977) Cardozo L Rev 1527; American Medical Association Council on Ethical and Judicial Affairs, “Ethical issues in the Patenting of Medical Procedures” (1998) 53 Food and Drug Law Journal 341).
[114] Increasingly however courts have come, more candidly and in my view more appropriately, to see the normative question as being the central issue. That is, as one Australian commentator put it: “[The issue is] to what extent (if any) legal constructions of the term ‘invention’ and patent eligibility generally can legitimately and openly accommodate ethical and other public policy considerations.” (See Pila “Methods of Medical Treatment within Australian and United Kingdom Patents Law” (2001) 24 UNSW L J 420, 421.) This is also the view taken by Ricketson The Law of Intellectual Property in the last edition (1984) of that work which still included a section on patents. He said, and I agree, “the real question in relation to the patentability of such methods is not whether they can regarded as methods of manufacture, but whether, as a matter of policy, such subject matter should be patented at all” (para 48.53).
[115] In fact, most countries still prohibit medical “method” patents of the character still in issue in this case. Writing in 1998, Kulbert in “Patents on Methods of Medical Treatment: Where Should the Balance Lie?” (1998) 1 NZIPJ 136, 143, suggested that “over 80 countries prohibit patents on methods of medical treatment”. And in England, under the Patent Act 1977 (UK), any invention that is claimed as a “method of treating the human or animal body by surgery or therapy or of diagnosis practised on the human or animal body” is unpatentable (s4(2)). Hence the new English statute itself confirmed the historic prohibition on patentability of methods of medical treatment.
[116] The traditional reason for exclusion from patentability is essentially a concession or exception that the protection of life and health are overarching human objectives which transcend what Jeremy Phillips once described as “the sordid realm of proprietary rights” (Introduction to Intellectual Property Law (1986) para 5.22). The proposition is that every individual should be able to expect a medical professional to be able to attend to his or her craft so as to serve the paramount aims of restoring health and decreasing pain. It would be unthinkable, it is said, by virtue of a patent grant, to prevent a health professional from performing her or his roles to the best of that person's knowledge and ability. It is worth adding here that the traditional reasoning was also that, since man is but one humble species of animal, it is only logical to extend the concession to read, for the treatment or diagnosis of man or beast.
[117] There was overt judicial support for these propositions in the judgment of Cooke J in Wellcome Foundation Limited v Commissioner of Patents [1983] NZLR 385, in this Court:
There remains … a deep-seated sense that the art of the physician or the surgeon in alleviating human suffering does not belong in the area of economic endeavour or trade and commerce. (at 388)
The changing conditions of medical treatment
[118] However, times change, and this general issue cannot be considered in isolation from the realities of modern day medicine. Essentially what happened as the 20th Century advanced, is that pharmaceutical therapy of one kind and another has become hugely significant, and has supplanted much traditional medicine. A number of wonder drugs for a wide range of human afflictions from heart conditions, through cancer, to every day burdens such as arthritis, have been developed - and to the general benefit of mankind.
[119] These drugs are enormously expensive to develop. The professional literature suggests that even an average drug can take ten years to bring to market, costs $1 billion dollars, and has about a 10 percent chance of attaining commercial success. Generic equivalents have been suggested, generally, to be about 66 percent of the original price (see Rose, < Topic 232). And the General Counsel to Pharmaceutical Research and Manufacturers of America has recently said:
The pharmaceutical research and development process is long, risky, and expensive. It typically takes from ten to fifteen years from drug discovery to approval by the Food and Drug Administration (FDA). Of every five thousand medicines tested, only one ultimately receives FDA approval. The average cost of developing a new drug has been estimated at $802 million. Only three out of every ten marketed drugs generate revenues that match or exceed average research and development costs (Kuhlik “The Assault on Pharmaceutical Intellectual Property” (2004) 71 U. Chicago L. Rev. 93, 94, footnotes omitted).
[120] Given the pronounced movement of medicine towards drug therapies, patent offices, judges, and legislatures world-wide have had to confront a voracious demand by the pharmaceutical industry for patent protection on the one hand, and the very real concerns of the medical profession and associated health systems, on the other. In turn, legal systems have had somehow to “mediate” this conflict (as Cornish and Llewellyn Intellectual Property: Patents, Copyright, Trade Marks & Allied Rights (5 ed, 2003) 215 term it).
[121] What the pharmaceutical industry is interested in, is new therapeutic compounds - particularly the so called “wonder drugs” - which promise very significant returns. These drugs as such can be patented. But the research leading to a patent is very expensive. This is largely because very large numbers of compounds have to be synthesised and tested to locate a single compound that is worth putting to clinical use, to which must be added substantial advertising costs. The costs of testing and introducing alternatives are also extremely high, and are normally such that, from the point of view of a competitor, they outweigh the actual production costs of the product, thus leaving a gap between production costs and practicable selling price. This inhibits a search for alternatives. (See, Blanco White Patents for Inventions and the Protection of Industrial Designs (4 ed 1974), 1-103). And, there is also the complication that in an extremely price sensitive industry like medicine, there will almost always be political intervention in some form. (The literature on the economics of patents is difficult. Kitch, “The Nature and Function of the Patent System” (1977) 20 JL & Econ 256 is still very useful; see also, Landes and Posner The Economic Structure of Intellectual Property Law (2003)).
[122] All of that said, it may be thought that the pharmaceutical companies have done relatively well in the legally mediated contest between the various competing interests. As in this case, there is no question that the drug compound itself can be patented. And the device of the allowing of Swiss-type claims in the northern hemisphere, and now in this country, has permitted drug manufacturers to gain extended patent protection, following the discovery of a known substance's second or subsequent medical use. (See Pharmaceutical Management Agency v Commissioner of Patents [2000] NZLR 529 (CA) and the discussion in Frankel and McClay Intellectual Property in New Zealand (2002) at 6.3.4).
[123] In the simplest terms, Swiss-type claims are a variety of “subsequent medical use” claims, made when someone discovers that a known drug has a previously unknown medical use. The term “Swiss” patent claim is, as the name suggests, derived from the country of Switzerland and the importance to the pharmaceutical and chemical industries of those countries. The names Novaris and Hoffman la Roche spring readily to mind. The allowance of Swiss-type claims even in this country, by this Court, has not gone unchallenged (see, for instance, the sharp criticism by Armstrong “The Arguments of Law, Policy and Practice Against Swiss-type Patent Claims” (2001) 32 VUWLR 201). But I emphasise that counsel for all parties before us was not anxious - for rather obvious reasons - to see disturbed the settled law: that Swiss-type claims are permissible in New Zealand.
The crux of the appeal
[124] This brings me directly to the crux of this appeal. Once a pharmaceutical manufacturer can patent the compound; and also get Swiss-type protection, the question does then have to be asked “well, what is left?” One argument is, why should the law not go the full distance, as it were, and make all aspects of medical treatment fully patentable? Another is that a line does have to be drawn somewhere, and, all things considered, the present law is sensible.
[125] Attempts have in fact been made elsewhere to draw other dividing lines. For instance, Australian law struggled with endeavouring to say that only applications in respect of methods of treatment of disease or ailments of the human body would be refused. This, on a so-called economic/non-economic distinction. But with all due respect the distinction is, as the leading Australian commentator noted, “tenuous”. (Ricketson The Law of Intellectual Property at 48.52.)
[126] In the end, as Professor Cornish has succinctly put it:
The exception covering the methods of medical treatment may be regarded as a last redoubt against the sweep of the patent system into the territory of health care. Previously many countries precluded patenting for chemical substances as a whole, or pharmaceutical substances. The obligation in the TRIPS Agreement to allow such patents demonstrates the lobbying power of the pharmaceutical industry in much of the world (para 5-73).
[127] What this present appeal urges is that the last redoubt should be breached. And, with all respect to the skill with which the arguments were advanced for the appellants by counsel of great experience in this subject area, the technique which is sought to be employed is to effect the breach by saying that, by a side-wind, and really without appreciating it, the Parliament of New Zealand has itself already brought down the walls.
[128] For myself, I think that Parliament would have to legislate in the clearest and most unequivocal terms before New Zealand law could be taken as having gone any further in the direction of unlimited protection of pharmaceutical patents, than the allowance of Swiss-type claims (which, in fairness to Parliament, are really a Court generated device). And whether it should do so, strikes me as a particularly difficult problem of public policy which lies well beyond the institutional competence of this Court.
[129] This brings me to some short points about the practical difficulties of this particular application. I begin by noting that the drug at issue here is Ziprasidone (as specified). I again emphasise that the pharmaceutical company has already received (without any objection) protection for the actual drug itself. That is as it should be, as a result of the admirable and doubtless expensive research efforts of the appellant company. What the dispute is about are the claims - for it is the specification which is the foundation of the all litigation of this type - whereby methods of administration of the drug are put in issue.
[130] I pressed Mr Andrew Brown QC in argument as to whether “a method” meant “any method”. He confirmed that was the proper construction of the claim. If that is so, I am greatly troubled by the proposition that a health professional (particularly in the mental health area) might, in effect, have to be glancing over his or her shoulder at the possibility of a claim of patent infringement whilst trying to do his or her level best for a patient in a particularly fraught field of therapy. Even if, therefore, it was somehow possible to discriminate on some basis (and the evolution of appropriate tests would be very difficult) it seems to me that the subject matter of this particular method claim is not particularly happy for an extension to the law.
[131] The standard answer - which was in fact advanced by the appellants - to this kind of concern, is that this sort of litigation would not in fact arise. But what is at stake in any suggested extension of the law is principle, not incidence. And there has certainly been at least one dramatic incident in North America which suggests that not all medical professionals view their traditional code of ethics in the traditional way. This is the case of Dr Pallin. He is an ophthalmologist who patented a method of “no stitch” eye surgery, and then sued another ophthalmologist for patent infringement. Dr Pallin said he intended to seek “millions of dollars” for royalties from other doctors. Two thousand doctors faced prosecution for patent infringement. Fortunately, the patent was found to be invalid, for technical reasons. (Pallin v Singer and Hitchcock Associates of Randall 36 USPQ 2d 1050 (D Vt 1995)).
[132] I must say that I was troubled too by the answers given to the Bench in response to questions in oral argument, as to what precisely is the need for the extended form of protection sought by these claims, in this case. The answers could conceivably have been of two kinds. First, they might have been “positive”, in the sense that they pointed out some practical gap in the protection available to a pharmaceutical company. Or, they might have been “defensive”, in the sense that for tactical reasons (that is, to protect the drug patent itself) some greater protection is required. Perhaps I have not sufficiently grasped the point, but I could not discern a sound reason - indeed really any reasons at all - for the extended protection being presently “necessary” in New Zealand.
[133] I appreciate that, historically, the traditional justification for intellectual property rights is ex-ante. That is, the object of intellectual property law is to influence behaviour that occurs before rights come into being, whereas there is a contemporary school of thought that says that it is what happens to rights after they are developed (ex-post behaviour) which may be more important. This is an argument redolent, in economic terms, of Swiss-type claims. But even against that recognition, I cannot see the argument being pressed before us. Indeed the consequence of extending patent protection to what amounts to protection of information about how to use the drug would intuitively be very anti-competitive.
[134] Finally, for my part I find it difficult to conceive how what I see to be the distinct extension of patent protection suggested by the appellant in this country could ever be countenanced without subjecting medical treatment patents to a regime of compulsory licensing. That would require legislation. And I also have great difficulty in seeing how the suggested undertakings not to sue would be fungible, for the protection of the greater public interest.
Solicitors
A J Park, Wellington for Appellant
Office Solicitor, Ministry of Economic Development, Wellington for Respondent