6 min read

Ariosa Diagnostics, Inc v Sequenom, Inc [2021] FCAFC 101

The Full Court of the Federal Court of Australia has confirmed that Sequenom’s diagnostic method of detecting fetal DNA in maternal blood is eligible for patent protection in Australia.  The decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.

However, the Full Court also found that Sequenom’s patent was not infringed by the importation of results from tests conducted overseas on the basis that the results were information and not a product that could be exploited.

The technology

Sequenom’s patent stemmed from the discovery of cell-free fetal DNA (cffDNA) in maternal blood serum and blood plasma by two researchers from Oxford University. The discovery enabled the development of a non-invasive prenatal test using maternal blood samples. 

The test could be used to determine the gender of an unborn baby, and its susceptibility to certain genetic conditions. Prior to the inventors’ discovery, obtaining a prenatal sample for testing typically involved inserting a needle through the mother’s abdomen or cervix. 

The patent

Claim 1 of Sequenom’s patent defines:

A detection method performed on a maternal serum or plasma sample from a pregnant female, which method comprises detecting the presence of a nucleic acid of foetal origin in the sample.

In the first instance decision, the Federal Court of Australia found that the use of the “Harmony” prenatal diagnostic test by Ariosa Diagnostics Inc, and by its licensees, Sonic Healthcare Limited and Clinical Laboratories Pty Ltd, infringed certain claims of Sequenom’s patent. On appeal, Ariosa challenged the validity of the claims and the finding of infringement.

Validity

Ariosa argued that the primary judge erred in finding that the claimed method is a “manner of manufacture” as required under the Patents Act because what is claimed is a mere discovery of a naturally occurring phenomenon. In a related submission, Ariosa contended that, properly understood, the end result of each claim is mere information.  The human-mediated “detection”, Ariosa argued, is no different from the discovery that cffDNA is detectable. Ariosa submitted that in substance there is no application of the discovery by simply claiming the detection of what has been discovered to exist. 

In support of their arguments, Ariosa cited D’Arcy v Myriad Genetics Inc [2015] HCA 35, in which the High Court found that claims defining isolated nucleic acids encoding mutant or polymorphic BRCA1 polypeptides were in substance directed to naturally occurring genetic information, which is not patentable subject matter.

The Full Court rejected Ariosa’s approach, finding that it disaggregated the discovery of cffDNA in maternal plasma or serum from the method used to harness that discovery. Although fetal nucleic acid occurs in nature, the Full Court found that the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method:

Unlike the position in Myriad, claim 1 is not, as a matter of substance, directed to genetic information, but to a method involving the practical application of a means for identifying and discriminating between maternal and foetal nucleic acid. Although foetal nucleic acid occurs in nature, the substance of the invention is not cffDNA itself, but the identification of that particular nucleic acid as a part of a method. It is impermissible to disaggregate the integers of the method to point only to the cffDNA as the “invention”. Identification of the substance of the invention does not involve disregarding material aspects of the claim language. The invention as claimed is not merely output, but the detection process which yields an output. This is the very type of subject matter considered to fall on the correct side of the line between discovery of a scientific fact or law of nature and invention (at [155]).

Their Honours observed that an invention may reside in an abstract idea that is put to a useful end, even though the way of putting it to that end can be carried out in many useful ways, all of which are otherwise known. While the mere discovery of a natural phenomenon is not eligible for a patent, the practical application of that discovery may very well be patentable subject matter.

The Full Court concluded that the invention defined by claim 1 of Sequenom’s patent ”falls firmly within the concept of a manner of manufacture as that term is to be understood having regard to the authorities, being an artificially created state of affairs of economic utility” (at [166]).

Ariosa’s other grounds of attack, namely, that the claims were invalid for lack of sufficiency and lack of fair basis, were also unsuccessful.

Infringement

Before conducting the Harmony Test in Australia, Ariosa’s Australian licensees, Sonic Healthcare and Clinical Laboratories, collected blood samples from pregnant women in Australia and sent those samples to Ariosa in the US. Ariosa then conducted the Harmony Test in the US and provided the results, in the form of a report made available by a file sharing platform, to Sonic Healthcare and Clinical Laboratories in Australia. 

The exclusive rights of a patentee to exploit an invention will ordinarily be infringed by importing the product of a patented process, even when that process is carried out overseas. This is because Australia’s Patents Act defines the term “exploit” as including:

where the invention is a method or process – use the method or process or do [acts including importing] in respect of a product resulting from such use.

The primary judge found that the method was infringed when it was performed in Australia, which was not in dispute in the present case. However, the primary judge also found that Sonic Healthcare’s and Clinical Laboratories’ “send out” model amounted to an infringement of Sequenom’s claims because it used a method that would have infringed the claims if conducted in Australia.

The Full Court disagreed, noting that the Patents Act does not provide a definition of the term “product”. Their Honours preferred a construction of the word “product” in the context of the definition of “exploit” which recognises that not all patented methods or processes will lead to a product. The Full Court observed that the broad definition applied by the primary judge could have consequences that are not sensible – a person who has heard the outcome of the Harmony Test, which may be as simple as “it’s a girl!”, and who then flies to Australia with that information may infringe the patent by importing that outcome.

The Full Court also noted the incongruity that would result from extending the patentee’s monopoly to encompass test results that are not them themselves patentable:

A claim to mere information is not patentable …. The fact that such information is derived from a patentable process or method cannot render the information itself patentable. In those circumstances, we do not consider that the word “product” in para (b) of the definition of “exploit” should be interpreted as extending the patentee’s monopoly to information which could not itself constitute patentable subject matter since it would have the unintended and odd consequence of permitting the patentee to obtain patent protection in respect of subject matter that has long been held to be unpatentable (at [269]).

Accordingly, because the imported test results are themselves information, and not a “product” as such, Sonic Healthcare’s and Clinical Laboratories’ send out model did not infringe Sequenom’s patent.  

Final comments

The Full Court’s decision highlights the different approaches taken by Australian, European and US authorities when it comes to assessing the patentability of diagnostic methods.  The corresponding patent application was found to be valid in the UK (Illumina, Inc v Premaitha Health Plc [2017] EWHC 2930), albeit under a different eligibility test, but was deemed invalid by the US Court of Appeals for the Federal Circuit (Ariosa Diagnostics, Inc. v Sequenom, Inc. 788 F.3d 1371 (Fed. Cir. 2015)).

In Australia, courts will construe a claim in its entirety, rather than considering each feature individually. While the mere discovery of a natural phenomenon may not be eligible for a patent in Australia, the practical application of that discovery may very well be, even where the application uses known methods.

The decision also confirms that not all patented methods will give rise to a “product” that can be exploited in an infringing act.

Ariosa and Sequenom have the option of applying for special leave to appeal the decision to the High Court. 

Authored by Karen Heilbronn Lee, PhD and Michael Christie, PhD

3 min read

Following a cacophony of dire warnings and lobbying over the past decade from the Australian biotechnology and medical sectors, and the sudden sharp focus of middle Australia on the critical importance of onshore manufacturing facilities such as those capable of mRNA vaccine production, the Federal Government has announced the introduction of a $206.4m patent box for Australian medical and biotechnology industries as part of the 2021-2022 Federal Budget handed down on 11 May 2021.

Named quite literally after a tick box historically present on income tax forms, a patent box provides tax incentives designed to encourage companies to commercialise and manufacture patented technology locally. From 1 July 2022, Australia’s proposed patent box is slated to tax income derived from eligible patents at a concessional corporate tax rate of 17%, rather than the standard corporate tax rate of 30%, or 25% for small and medium enterprises (SMEs).

While the specifics are yet to be established, the patent box is proposed to apply to income derived from granted Australian patents in the medical and biotechnology sectors filed after the budget announcement (ie, after 11 May 2021), providing that at least a portion of the research and development (R&D) of the technology occurred in Australia. The following example was provided with the Federal budget papers: A company selling a patented product makes $175 million in net income directly attributable to the patent. If 80% of the R&D associated with the patented product occurred in Australia, then 80% of the income (ie, $140 million) would enjoy the concessional 17% tax rate. 

The measure is intended to incentivise Australian companies to invest in and perform their R&D, commercialisation and manufacturing of patented technologies onshore. It has been warmly received by the Australian biotechnology sector with Lorraine Chiroiu, CEO of AusBiotech, stating that the organization whole-heartedly commends the initiative: “This tax incentive will address the gap that leaves our IP vulnerable, retain home-grown IP, and support Australian innovators and manufacturers. It will make the commercialisation of IP and manufacturing in Australia more genuinely viable for businesses.”

Cochlear’s CEO, Dig Howitt, has similarly commented: “Incentivising companies of all sizes to keep their intellectual property and manufacturing in Australia will generate substantial economic benefits through royalties, licence fees, tax revenues, supply chains, jobs, and capital investment.”

CSL CEO Dr Andrew Nash concurs, stating, “CSL welcomes the introduction of a patent box which will help decrease the flow of intellectual property from local medical research going overseas. It will drive the growth of advanced manufacturing jobs, capital intensive investment and sovereign capacity in medical technology and biotechnology manufacturing.”

A number of countries already have patent box regimes, including the UK, Belgium, Spain, France, the Netherlands, Luxembourg, Switzerland, and China. Australia’s patent box is set to follow the Organisation for Economic Co-operation and Development (OECD)’s guidance on patent boxes to meet internationally accepted standards.

The Government has indicated that it will consult with industry on the design of the patent box and explore whether the regime should be extended to include clean energy patents. Lobbying from that sector is already well underway.

On a technical note, several years typically elapse between patent filing and patent grant. Accordingly, it could be some three or four years before the patent box regime begins to provide significant benefit. Patent grant can, however, be brought forward by various means including requesting early national phase entry in Australia followed by expedited examination. If you require advice on this issue, Shelston IP would be happy to help.     

Authored by Karen Heilbronn Lee, PhD and Allira Hudson-Gofers