In Cancer Voices Australia v Myriad Genetics Pty Ltd (2013) (‘Cancer Voices v Myriad’), Nicholas J of the Federal Court of Australia applied the principle that an artificially-created state of affairs of economic significance is capable of attracting patent protection.1 This principle supposedly originated from the High Court of Australia’s 1955 decision in National Research Development Corporation v Commissioner of Patents2 (‘NRDC’). However, Ann Monotti observed in 2006 that ‘it is difficult to find a clear ratio’ in NRDC, and it was not until the Federal Court’s decision in CCOM Pty Ltd v Jiejing Pty Ltd (1994) that the phrase ‘a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour’ was coined.3

The phrase has been considered by some courts to be an attractive paraphrase of NRDC,4 and it is this rule (‘the NRDC/CCOM rule’) that Nicholas J applied in Cancer Voices v Myriad:

It is apparent … that a product that consists of an artificially created state of affairs which has economic significance will constitute a ‘manner of manufacture’.5

With respect to his honour, this is not the rule established by either NRDC or CCOM. Nicholas J based his remark on passages from NRDC, including:

[T]he view which we think is correct in the present case is that the method … has as its end result an artificial effect falling squarely within the true concept of what must be produced by a process if it is to be held patentable. … The effect produced by the appellant’s method exhibits the two essential qualities upon which ‘product’ and ‘vendible’ seem designed to insist. It is a ‘product’ because it consists in an artificially created state of affairs [a]nd the significance of the product is economic …6

It was not the ‘effect produced’ by the application of the method that was considered patentable in NRDC, but the inventive method that was the subject of the patent. The method was patentable because it resulted in a product consisting in an artificial state of affairs of economic significance. Nicholas J applied the NRDC/CCOM rule erroneously by holding that the product itself and not the process that resulted in the product could be patented.

A helpful and recent clarification of the NRDC/CCOM rule was provided by Hayne J in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) (‘Apotex v Sanofi-Aventis’):

‘Product’ can be described as a ‘result’, an ‘outcome’ or an ‘effect’. It was described in the NRDC Case as ‘any physical phenomenon in which the effect, be it creation or merely alteration, may be observed’ … Second … it is of the first importance to recognise that the Court’s treatment in the NRDC Case of the notion of a ‘vendible product’ was directed to identifying whether the process in question was a proper subject for the grant of a patent.7

Nicholas J’s decision does not accord with either NRDC or CCOM. Neither case indicates that ‘an artificial state of affairs … of utility in a field of economic endeavour’ is patentable: that is merely the necessary product, result, outcome or effect that gives rise to a patentable process, but is not in itself explicitly patentable.

Cancer Voices v Myriad upheld a patent on the economically-significant artificial state of affairs, not merely the process of achieving that result. Had NRDC been decided with the same reasoning, it would have produced the anomalous result of allowing a patent on the artificially-created state of affairs that is a field devoid of weeds, rather than the process of achieving that state of affairs.

It is unimaginable that the legislature would intend to grant a monopoly over such a situation. Professor Dianne Nicol has expressed concern that it ‘is difficult to think of circumstances where an artificially created state of affairs would not exist wherever there is some form of human intervention’,8 while Dr Luigi Polombi was more critical, stating that

it turns patent law on its head. The end result is that effectively now anything that’s artificial — and that can be just simply removing something from its natural environment — has the potential to be patented.9

Contrary to Nicholas J’s interpretation, the law should instead follow the suggestion of William van Caenegem, who wrote in 2002 that

[r]ephrased, a post-NRDC definition of patentable subject matter other than a product, might therefore read: ‘[A] process or method that does not belong to the fine arts, the application of which results in the production of an artificial state of affairs, and that is of economic significance.’10

The Courts established the NRDC/CCOM rule as a separate rule for patentable subject matter other than products, and it is only in regard to those claims that the rule should be applied.11 This can consistently be inferred from cases determined by the Federal Court,12 and is the approach that has been taken by the Australian Patent Office.13 The Commissioner of Patents’ 2013 determination in Swiss Reinsurance Company is a helpful reminder of the NRDC/CCOM rule: ‘The Court laid down the well known requirement that a process must produce “an artificially created state of affairs” in order to be held patentable.’14

Calvin Lau and Catherine Logan noted that ‘[i]n Australia, the Court must consider whether the isolated DNA is an “artificially created state of affairs”’,15 an assertion that is questionable given the NRDC/CCOM rule has historically been applied only to patents for methods in Australia. Despite this, it is impossible to ignore that ‘[t]his approach was clearly open to [Nicholas J to] take based on prior cases.’16 However, on appeal the Full Court of the Federal Court may decide that this was the incorrect approach to take on the basis that:

  1. it has not been the practice to apply the NRDC/CCOM rule to non-process patents;
  2. doing so could open the floodgates for further patent applications and litigation; and
  3. Nicholas J has overextended the application of the rule beyond process patents, to which it should have been confined.

What the Full Court must consider, in the words of the High Court, is whether ‘this is a proper subject of letters patent according to the principles which have been developed for the application of s[ection] 6 of the Statute of Monopolies’.17 The principles which have been developed, including those in NRDC, strongly indicate that the NRDC/CCOM rule only applies to determining the validity of method patents by testing the results of applying the process. The Full Court ought therefore to overturn Nicholas J’s decision.

[EDIT: The Full Court upheld the Nicholas J’s decision. However, on appeal to the High Court, the decision was overturned consistent with the argument in this essay.]

  1. Cancer Voices v Myriad (2013) 99 IPR 567, 585, 588. ↩

  2. National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 ↩

  3. Ann Monotti, ‘The Scope of “Manner of Manufacture” under the Patents Act 1990 (Cth) after Grant v Commissioner of Patents’ (2006) 24 Federal Law Review 461, 465 quoting CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 CLR 260, 295. ↩

  4. Ibid. ↩

  5. Cancer Voices v Myriad (2013) 99 IPR 567, 585, 588. ↩

  6. NRDC (1959) 102 CLR 252, 277 quoted in Cancer Voices v Myriad (2013) 99 IPR 567, 585, 587. ↩

  7. Apotex v Sanofi-Aventis (2013) 304 ALR 1, 30. ↩

  8. Matthew Rimmer, ‘The Empire of Cancer: Gene Patents and Cancer Voices’ (2012–13) 22(2) Journal of Law, Information and Science 13, 44 quoting Sunanda Creagh and Will Mumford, ‘Historic Ruling Allow Private Firms to Patent Genetic Material’, The Conversation (online), 15 February 2013 <http://theconversation.com/historic-ruling-allows-private-firms-to-patent-human- genetic-material-12239>. ↩

  9. Sunanda Creagh and Will Mumford, ‘Historic Ruling Allow Private Firms to Patent Genetic Material’, The Conversation (online), 15 February 2013 <http://theconversation.com/historic-ruling-allows-private-firms-to-patent-human- genetic-material-12239> ↩

  10. William van Caenegem, ‘The Technicality Requirement, Patent Scope and Patentable Subject Matter in Australia’ (2002) 13 Australian Intellectual Property Journal 41, 43. ↩

  11. Ibid. Van Caenegem suggests at 51 that the NRDC/CCOM rule applies to process patents only and his entire article is based on this proposition. ↩

  12. See, eg, Research Affiliates LLC v Commissioner of Patents [2013] FCA 71; Dynamite Games Pty Limited v Aruze Gaming Australia Pty Limited [2013] FCA 163 (4 March 2013); RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871 (30 August 2013). These are consistent with the Full Court’s decision in Grant v Commissioner of Patents [2006] FCAFC 120 (18 July 2006) that the test is applied to methods and processes. ↩

  13. See, eg, Invention Pathways Pty Ltd [2010] APO 10 (21 July 2010); Celgene Corporation [2013] APO 14 (29 January 2013); Swiss Reinsurance Company [2013] APO 24 (13 March 2013); Svetko Lisicia [2013] APO 44 (1 August 2013). ↩

  14. Swiss Reinsurance Company [2013] APO 24 (13 March 2013) [20]. ↩

  15. Calvin Lau and Catherine Logan, ‘Patentability of Genetic Material — Where Does It Stand Today?’ 26(3) Australian Intellectual Property Bulletin 54, 55. ↩

  16. Creagh and Mumford, above n 8. ↩

  17. NRDC (1959) 102 CLR 252, 269. ↩