THE INTELLECTUAL PROPERTY SOCIETY OF AUSTRALIA AND NEW ZEALAND QUEENSLAND ANNUAL JUDGE’S DINNER 2014

23 OCTOBER 2014

“RANDOM OBSERVATIONS OF A SOUTHERN JUDGE OR WHAT DOES SPORTS LAW HAVE IN COMMON WITH PATENT LAW?” *

The Honourable Justice Middleton
Ladies and Gentleman,
I am delighted to be here in Brisbane tonight to address a group of people interested in intellectual property law, and hopefully, the law generally.
One never really knows the role of a dinner speaker at functions such as these – is it to educate, to entertain, to amuse … if it is any of these I fear you may be disappointed.  Because I have had no designated topic to speak to, I have given two titles to this talk: one, “Random observations of a Southern Judge”.  This is not to detract from the federal and national nature of my appointment, but just to state the obvious that I hail from Victoria.  
The other title is “What does sports law have in common with patent law?”
Some of you may have noticed, but I expect less so than Victorians, that the Court has been subjected to a certain amount of media attention relating to AFL football.  I will say nothing of the actual decision in Essendon v ASADA, it being in part appealed from by Mr James Hird.
Media attention on the ASADA case started right from the beginning of the proceedings.
One Sports blogger commentator made the following observations of “What happened at the ASADA/Essendon directions hearing”:
•	A lot of middle aged white guys talked and talked and talked.
•	While banging on for hours, they all made a ridiculous amount of money.
•	At no point did someone say ‘you want the truth?’ which was the only reason I was watching.
•	It was announced that James Hird will return to Melbourne on July 28.  This is the same day in 1914 that Austria-Hungary declared war on Serbia leading to WW1.
•	I learnt that court is really boring and nothing like My Cousin Vinny or Ally McBeal.
•	August 11 will be the trial to decide if the joint investigation (now alleged) was illegal It will take three days, but if you watch live, it will feel like 300 days.
•	Lawyers refer to Acts of Parliament a lot. They are obsessed with them.
•	There will be another directions hearing on July 2nd because a few of the lawyers need to cover third term private school fees.
•	No one said ‘objection’ ruining my drinking game.
•	I didn’t understand anything that was being said. I could make out some of the individual words, but I would then start to drift off.
•	Journalists on social media gave it a really good shot of pretending to understand what was going on. It became obvious they had no idea though.
•	The 34 players involved watched the NBA draft instead.
•	Lawyers didn’t wear robes or wigs which I thought was a real shame and detracted from the event.
•	I didn’t hear the Essendon theme song at the end so I assume they lost.
I want to return later to draw specific attention to the Full Court decision in D'Arcy v Myriad Genetics Inc (‘Myriad’) – which gives rise to the second title: “What does sports law have in common with patent law?”  I will answer this immediately so you do not need to remain attentive throughout my talk – the common element is media attention.  
All in all, the media reaction to the Myriad decision, directed to the Court, has been relatively mild.  This needs to be put in context.  Media attention can come in many forms.  In relation to some High Court decisions, Justice Michael Kirby has recalled:
the Court and the justices were labelled “bogus”, “pusillanimous and evasive”, guilty of “plunging Australia into the abyss”, a “pathetic ... self-appointed [group of] Kings and Queens”, a group of “basket-weavers”, “gripped ... in a mania for progressivism”, purveyors of “intellectual dishonesty”, unaware of “its place”, “adventurous”, needing a “good behaviour bond”, needing, on the contrary, a sentence to “life on the streets”, an “unfaithful servant of the Constitution”, “undermining democracy”, a body “packed with feral judges”, [and] “a professional labor cartel”. 
I have found that if a journalist agrees with a decision, he or she refers to me politely as “Justice John Middleton”; if he or she doesn’t agree, it’s either just “John Middleton”, or  in one case recently, “Middleton”. So far as public criticism is concerned, perhaps I should be happy that the press have only had a few occasions to comment upon or criticise my published judgments. 
Criticism of the judiciary is not new.  In 1900, there was the incident of the Birmingham newspaper which contained a criticism in the following terms of Justice Darling who was holding the local assizes in England:
… If anyone can imagine Little Tich upholding his dignity upon a point of honour in a public house, he has a very fair conception of what Mr Justice Darling looked like in ruling the Press against the printing of indecent evidence. His diminutive Lordship positively glowed with judicial self-consciousness. No newspaper can exist except upon its merits, a condition from which the Bench, happily for Mr Justice Darling, is exempt. There is not a journalist in Birmingham who has anything to learn from the imprudent little man in horsehair, a microcosm of conceit and empty headedness. One is almost sorry that the Lord Chancellor had not another relative to provide for on the day that he selected a new judge from among the larrikins of the law. One of Justice Darling’s biographers states that “an eccentric left him much money”. That misguided testator spoiled a successful bus conductor.
Normally patent decisions (unlike football cases) do not excite the media, although they do stir some feelings amongst the profession.
There have been a number of decisions in the last year which have involved developments in patent law in Australia, and which have been extensively commented upon by the profession and the public media. One might almost call them “landmark”.
In 2014, the full bench of the Federal Court, on two occasions, unanimously upheld a trial judge’s decision in patent matters. Both of these decisions have since been the subject of special leave applications to the High Court. Also in the past year, the High Court laid down the law in relation to the patentability of methods of medical treatments.
Whilst there have been several patent decisions in the past year, including some Full Court matters, I will focus on three decisions which I think were of particular significance in the way they shaped or clarified the law, or due to the media reaction they received.
The first significant patent decision in the last year was the High Court’s 4:1 majority in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (‘Sanofi’) which was handed down on 4 December 2013. That case concerned the validity of Sanofi’s patent for a “pharmaceutical for the treatment of skin disorders”, which claimed a method for using a compound called Leflunomide to treat psoriasis. Canadian generic drug manufacturer Apotex, sought to supply its generic drug, Apo-Leflunomide, and so the familiar infringement proceedings and subsequent invalidity cross-claim ensued.
The central issue on appeal to the High Court was whether the subject matter of Sanofi’s patent, a method of medical treatment of human beings, was patentable subject matter, or was excluded from patentability. This was to be considered for the first time. As Chief Justice French put it, “the exclusionary proposition has not been examined directly in any decision of this Court”.  
To be patentable, an invention must first be “a manner of manufacture within the meaning of s 6 of the Statute of Monopolies”.  Chief Justice French and Justices Crennan and Kiefel together ran through a history of the treatment of the term “manner of manufacture”, and the emergence of the common law exclusion of medical treatment from that concept, and therefore from patentability. In doing so, Chief Justice French found that the
…history … does not disclose a stable, logical or normative foundation [for the exclusion] and seems to depend upon rather nice distinctions for its maintenance. 
Justices Crennan and Kiefel similarly rejected such an exclusion.  In doing so, their Honours provided seven reasons as to why methods of medical treatment can be patentable inventions.  Justice Gageler, in a concurring judgment, added an eighth.  The first five reasons are worth summarising here.
First, they rejected the notion that medical treatments are “essentially non-economic”, a criterion which Apotex had picked up from obiter in the 1959 High Court decision in National Research Development Corporation v Commissioner of Patents(‘NRDC’) as conflating the requirements of manner of manufacture and utility.  Chief Justice French rejected the notion on its own term, stating that “there is no gainsaying the economic significance of medical treatments independently of the flow-on benefits of a well-maintained work force”.  On this point, Justices Crennan and Kiefel added that:
[t]he economic utility of novel products and novel methods and processes in the pharmaceutical industry is underscored by s 119A of the … Act and by their strict regulation in the Therapeutic Goods Act 1989 (Cth).
Secondly, the Patents Act 1990 (Cth) (‘the Act’) contains no such exclusion, whether express or implied, and in fact contains some inferences to the patentability of methods of medical treatment.  Further, Parliament, faced with many opportunities to amend the Act to contain such an exclusion, had not done so. 
Thirdly, their Honours pointed to what Justice Gummow had held in Rescare Ltd v Anaesthetic Supplies Pty Ltd  that “there was no normative distinction to be drawn between those processes for treatment of the human body for disease… and [those processes] for cosmetic purposes”, the latter which had not been excluded from patentability.
Fourthly, their Honours found that it was not possible to distinguish in terms of economics and ethics, a claim for a product for medical treatment, and a claim for a method of medical treatment. 
Fifthly, such a method claim satisfies the criteria in the NRDC case as long as it “belongs to a useful art, effects an artificially created improvement in something, and can have economic utility”.
In summary, the principles in the NRDC case were affirmed: if the product or process consists of the “two essential qualities”, namely “an artificially created state of affairs… [providing] its own economic utility”, it is the required “manner of manufacture”.  The notion of any blanket exclusion of medical treatment from this rule was therefore rejected. 
Chief Justice French added an important point, that while there might be arguable public policy tensions at play in considering such an exclusion, the reconciliation of such tensions “is, for the most part, best left to the legislature”.  Nevertheless, the court may act where an “exception to a general principle may have become anomalous to such an extent that its removal would enhance the logical and/or normative coherence of the law”, as was the case here.
A second important patent decision was the Full Court’s decision in Astrazenca AB and Another v Apotex Pty Ltd (‘AstraZeneca’) which it delivered in August this year. In that case, three generic pharmaceutical suppliers sought to supply generic versions of AstraZeneca’s cholesterol-lowering drug, known as CRESTOR, which contained the active ingredient rosuvastatin. Again, the usual infringement and validity questions arose. 
On appeal, the Full Court considered a wide range of issues and grounds of invalidly put forward by the generic parties. Of those grounds, the Full Court’s finding in relation to the starting point for assessing inventive step made the most impact on the patent law space, so I will focus on that point alone.
This was the first time the Full Court had considered the “starting point” issue, which was articulated by the Court as:
…whether a valid patent may be obtained for an invention that comprises a solution to a problem in the relevant art where the solution is obvious, but where the problem is neither common general knowledge nor information to which regard may be had pursuant to s 7(3) of the Act. 
Section 18(1)(b)(ii) of the Act, read with ss 7(2) and (3) indicate that the “invention…so far as claimed in any claim… when compared with the prior art base as it existed before the priority date of that claim” must not “have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim…” .
At first instance, the primary judge held that there was no inventive step.  This was because for the purposes of comparison, the meaning of “invention…so far as claimed in any claim”  must be properly construed, and this was done by reference to the complete specification, including the description of any “problem” that the patent is seeking to address. In doing so, the primary judge relied on an earlier 2009 Full Court decision. 
On a reading of the relevant sections, the Full Court found that:
it is apparent that the relevant provisions of the Act do not expressly or impliedly contemplate that the body of knowledge and information against which the question whether or not an invention, so far as claimed, involves an inventive step is to be determined may be enlarged by reference to the inventor’s (or patent applicant’s) description in the complete specification of the invention including, in particular, any problem that the invention is explicitly or implicitly directed at solving 

(emphasis added)
Therefore, only:
[i]f the problem addressed by a patent specification is itself common general knowledge, or if knowledge of the problem is s 7(3) information, then such knowledge or information will be attributed to the hypothetical person skilled in the art for the purpose of assessing obviousness. 
In other words, the content of the patent specification, including any articulated “problem” which the patent seeks to address, is not to be used in determining the starting point for the assessment of inventive step, unless that problem is also common general knowledge or prior art.
The Full Court provided a number of reasons why this is the case, including difficulties that may arise in correctly construing the “problem” as described in the specification.  One important reason was if the problem described in the specification was not common general knowledge nor prior art information, a permitted assessment of that problem (being not publicly available information) as the relevant “starting point” for inventive step, would be “antithetical to patent law” and the purpose of the statutory comparison.
The majority did not overturn the 2009 decision on which the primary judge had relied, instead confining it to the operation of the 1952 Act, which was relevant in that case.  Justice Jessup went a step further, but this is not the occasion to discuss his individual view.
Another important patent decision which I plan to mention tonight was the Full Court’s unanimous decision in Myriad handed down in September. 
In the Myriad proceeding, Yvonne D’Arcy had sought to revoke three claims of the relevant patent.  The patent was owned by a US molecular diagnostic company Myriad Genetics Inc, and was licensed to Australian company Genetic Technologies Ltd. 
The three impugned claims related to isolated nucleic acid (or a ‘gene’), which, if it contains mutations, may indicate a strong disposition to breast and ovarian cancers. 
Myriad owns similar (although differently drafted) patents in other jurisdictions, including in the US.  Their patent was also recently the subject of litigation in the US, and attracted much media commentary, fuelled not only by the interest in developments in cancer-treating or cancer-detecting technology, nor the widespread legal and ethical interest in the issue of gene patenting, but also by the even broader interest in actress Angelina Jolie, and her use of Myriad’s test.
The case before the Full Court concerned only one key issue: was the subject matter of claim 1, a manner of manufacture? 
The subject matter of claim 1, put very simply (if one can), was isolated nucleic acid, which codes for a particular gene, and which compares positively with certain comparison tables.
The crossover of genetics, molecular biology and biotechnology inherent in discerning, let alone understanding the subject matter, was exceedingly complex. So complex in fact, that Associate Justice Antonin Scalia of the US Supreme Court, whilst concurring with the majority in their Myriad decision, added that:
I join the judgment of the Court, and all of its opinion except Part I-A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief… 
For the purpose of tonight’s talk however, I will spare you those “fine details”.
Helpfully, Justice Nicholas at first instance had succinctly distilled the science into 44 paragraphs, which were reproduced verbatim in the Full Court judgment.
The Full Court reviewed the Australian case law and legislative landscape, upholding the approach to “manner of manufacture” adopted by the High Court in NRDC, and noting, as had Justices Crennan and Kiefel in Sanofi, that the Australian Government had contemplated and rejected the introduction of exclusions to patentability for “biological material”.
Relevant principles in determining whether an invention was a “manner of manufacture” included the following: 
(a)	An invention may be patentable, as long as it involves more than simply a claim for a new use for an old substance.
(b)	“For there to be a patentable invention there must be something which the alleged invention has super-added to the existing knowledge concerning the product.”
(c)	“It is only necessary to show one inventive step in the advance made beyond the prior limits of the relevant art”; and
(d)	“Expressions such as the ‘work of nature’ or the ‘laws of nature’ could fairly be employed to challenge almost any patent” and are therefore unhelpful in the assessment of patentability. This last point referred to the US exception to patentability of “laws of nature”, and involved an adoption of the reasoning of Justice Frankfurter’s concurring opinion in the 1948 US case, Funk Brothers Seed Company v Kalo Inoculant Company(‘Funk Brothers’).  In that case, his Honour rejected such blanket exceptions, especially when formulated in “vague and malleable terms infected with too much ambiguity and equivocation”.  
Importantly, the Full Court noted the recent High Court decision in Sanofi, which had upheld the NRDC principles and reiterated the criteria of “an artificially created state of affairs providing economic utility”.
The Full Court examined the Myriad litigation in the US, noting that the claims of the US patent were drafted differently to the claims in the Australian proceeding. That aside, the Full Court observed, as did the High Court in Sanofi, that the US Supreme Court’s “reasoning focussed on the information contained in the nucleic acid sequences and not on the product itself”, and added that its “emphasis on the similarity of ‘the location and order of the nucleotides’ existing within the nucleic acid in nature before Myriad found them” was, with respect, “misplaced”. 
The US Supreme Court briefly considered Funk Brothers, but did not deal with Justice Frankfurter’s approach.  In fact, they found that in Funk Brothers, the patent applicant’s “patent claim … fell squarely within the law of nature exception [as]… do Myriad’s”.  US academic Professor Ted Sichelman has recently argued in favour of Justice Frankfurter’s aversion to “such conceptual line-drawing”, and instead advocated for “a more policy-driven approach”.  
In contrast to the US approach, the Full Court approved of—and found “persuasive”—the approach taken by the majority in the US Court of Appeals for the Federal Circuit which focused not on the similarities of information contained in the isolated DNA sequence and in situ, but “on differences in structure and function effected by the intervention of man”. 
The Court of Appeals’ approach was seen as having “some similarity to the reasoning in NRDC”, in that first it sought to identify, for the purposes of patentability, “whether human intervention has given the composition ‘markedly different or distinctive characteristics’“. 
And secondly, that approach necessitated a focus on the differences in both structural and chemical makeup of the isolated DNA sequence, and importantly “whether [those] differences impart a new utility which makes the molecules markedly different from nature”.
These two points evoke what Justice Gageler in Sanofi called the “two essential qualities” of patentability derived from NRDC, namely “an artificially created state of affairs” having “value … in the field of economic endeavour”.
Much of the determination of Ms D’Arcy’s submissions turned on complex questions of science. One of these concerned her submission that the patent was invalid since “something that occurs in nature cannot be artificial but is a product of nature”.  This submission was dismissed by the Full Court as inconsistent with NRDC reasoning. The example was given that a naturally occurring product-of-nature living organism, if used to produce an antibiotic, could be patentable. 
In assessing patentability, the Full Court held that the NRDC principles were “not to be applied in a narrow sense”, and the claim in question was “to be construed according to the normal principles of claim construction”.  In doing so, it made two key findings. 
First, there were significant structural and chemical differences in the isolated nucleic acid, and the claim, which envisaged a comparison process, could not be performed without that isolation.  As such there was the requisite “artificially created state of affairs”. 
Secondly, the Full Court observed that “the isolation of the nucleic acid also leads to an economically useful result — in this case, the treatment of breast and ovarian cancers... [and that such usefulness] is surely what was contemplated by a manner of new manufacture in the Statute of Monopolies”. 
There were some other matters mentioned in the judgment, but the main points I have mentioned above.
Whilst the Sanofi and AstraZeneca decisions were widely commented upon in legal circles, there was little commentary in the public media. However, as I mentioned, the media was watching the Myriad decision very closely, and the reaction of the popular press could be characterised as mild outrage. The Fairfax press noted that “cancer survivors and advocates are devastated at [the]…decision”, whilst others noted that it was “out of step with the US Supreme Court” 
Objection was taken with the notion that a part of the body may be owned, which is, with respect, a simplification of the law to the point of incorrectness, and demonstrates a lack of familiarity or understanding of the science of the particular invention claimed. That said, Justice Scalia was quite open about his confusion, so who can blame them? 
Helpfully, some media outlets attempted to distil the law and science into an ‘explainer’ document in order to inform the public discussion. This attempt, whilst commendable, is understandably limited.
Cancer advocates were quoted as saying that “if the ruling was an interpretation of the law, then the law needed to change”.  This call for legislative reform picked up on the articulation in the judgment itself, and in the Sanofi decision that complex questions of public policy, are best left to the legislature.
Having made mention of some of the significant patent judgments, time does not permit observations on many other developments and decisions in intellectual property law generally.  This will be a relief to you all.
I thank you for your invitation to speak tonight, please return to your enjoyment of the evening prior to my interruption in the delivery of these random observations.