Pharmaceutical companies breathe a sigh of relief: Australia's highest court confirms that methods of medical treatment are patentable

Date: 2013-12-17

For many years, there has been an assumption that methods of medical treatment are patentable under Australian law, but this has never actually been tested at the highest judicial level.

The decision in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd1 marks the very first time in Australia that our ultimate appellate court (the equivalent of the Supreme Court in the US) has considered the issue.

In a landmark decision, a five-judge bench of the High Court of Australia held (by a 4:1 majority) that methods of medical treatment of human beings are patentable subject matter.

The decision will be welcomed by patent rights holders who would have been left with invalid patent claims and, in many situations, without adequate fall-back positions, if the court had decided against the patentability of such claims.

In the same decision, the Court overturned the lower court’s finding on contributory infringement, clarifying the scope of what constitutes contributory infringement in Australia. In this article we will be focussing on the patentability aspect of the decision. The decision on infringement is dealt with in a separate article: Australia’s highest court takes a knife to indirect infringement: “carve-outs” in product information leaflets are a legitimate way of avoiding indirect infringement.

As discussed in our earlier article: Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd - Claiming intent the decision of the Federal Court of Appeal in this case, the subject of these proceedings was Australian patent number 670491 to Sanofi-Aventis Deutschland GmbH. It contains a single claim to:

A method of preventing or treating a skin disorder, wherein the skin disorder is psoriasis, which comprises administering to a recipient an effective amount of a pharmaceutical composition containing as an active ingredient a compound of formula I or II…

The compound of formula I is the active known as leflunomide, which is sold in Australia under the trade names “Arava” and “Arabloc” by the Australian subsidiary of the patentee for treatment of rheumatoid arthritis (RA) and psoriatic arthritis (PsA).

Apotex Pty Ltd (“Apotex”) registered its generic leflunomide product for treatment of PsA and RA in July 2008 and was subsequently sued for infringement of the method claim of AU 670491 (above) by Sanofi.

At first instance and on appeal, the patent was found to be valid and infringed. One of the issues on appeal before the High Court was whether the subject matter of the claim of AU 670491 (i.e. a method of medical treatment) was a “manner of manufacture” and therefore patentable.2

The patentability of methods of medical treatment has always been a vexed issue, underpinned by the tension that exists in trying to strike a balance between public policy concerns and the need to encourage research and innovation into new medical treatments.

Different countries have dealt with the issue in different ways. In Europe, methods of medical treatment are not patentable and the Swiss-style approach to claiming has evolved as an alternative. In the US, methods of medical treatment are patentable but methods of surgical treatment are not.

In this decision, the four judges came to the conclusion that methods of medical treatment were patentable after reviewing long-standing Australian case law on what constitutes a “manner of manufacture”. The cases included National Research Development Council v Commissioner of Patents (“NRDC”, which eliminated the need for an “invention” to result in a vendible product), Wellcome Foundation v Commissioner of Patents (which re-stated the principle in NRDC that a patentable “invention” extends to a process that results in a new and useful effect that provides economic utility), Anaesthetic Supplies Pty Ltd v Rescare Ltd (where Gummow J did not accept the generality of obiter dicta in NRDC, and another case Maeder v Busch, that methods of medical treatment of the human body are “essentially non-economic”), and Bristol-Myers Squibb Co v FH Faulding & Co Ltd (“Bristol-Myers Squibb”).

In fact, it was the decision in Bristol-Myers Squibb that appeared to be most determinative, with four of the judges concluding, as had been discussed in that decision, that there is a great difficulty in drawing any logical distinction between a method of treatment and a pharmaceutical product (which is considered to be a patentable invention) that produces the same beneficial results. In addition, the judges considered that, if public policy required medical treatment and surgical processes to be excluded from patent protection, it was for Parliament to amend the legislation to include such an exclusion. The judges noted that Parliament had not included such a provision, despite the number of times that the legislation had already been amended for other purposes, and despite the fact that other countries, such as the UK, had added specific method of treatment exclusions to their legislation.

Interestingly, an important focus of the High Court was the “economic” or “commercial” facet of what constitutes an “invention” as set out in section 6 of the Statute of Monopolies, rather than issues relating to the ethical or moral reasons behind the patentability (or otherwise) of methods of treatment. On this point, the four assenting judges concluded that methods of treatment do have an economic benefit (albeit indirect) and that this was sufficient to fulfil the requirements of “industrial applicability” and “economic utility”.

In a dissenting judgement, Hayne J disagreed with the other four judges’ conclusions as to the economic utility of methods of medical treatment. Hayne J considered that the inquiry about economic advantage or value had shifted (as the case law on the subject developed), from a consideration of the economic advantage or value of the product (i.e. the result, outcome or effect) of the process (which Hayne J considered was the correct consideration of economic utility) to whether the process itself could be exploited commercially. On this basis, Hayne J concluded that, because a process for the prevention or treatment of human disease does not produce an outcome that is capable of commercial exploitation (notwithstanding that the process itself may well be capable of commercial exploitation), it is not proper subject matter for a patent.

Interestingly, while Crennan and Kiefel JJ concluded that methods of treatment were patentable subject matter, they did consider that the activities or procedures of doctors (and other medical staff):3

…speaking generally … are, in the language of the NRDC Case “essentially non-economic” and, in the language of the EPC and the Patents Act 1977 (UK), they are not “susceptible” or “capable” of industrial application. To the extent that such activities or procedures involve “a method or process”, they are unlikely to be able to satisfy the NRDC Case test for the patentability of processes because they are not capable of being practically applied in commerce or industry, a necessary prerequisite of a “manner of manufacture”.

However, the judges considered it unnecessary to decide the point, “or to seek to characterise such activities or procedures exhaustively”.4  This does leave open the question as to the implications of this statement in terms of how method of treatment claims are to be interpreted (and how infringement of such claims is to be assessed). If the issue of the patentability of method of treatment claims is considered by Parliament, this statement may offer an incentive to add provisions (as has been done in other countries) that provide a specific exemption to infringement by medical practitioners.

1 [2013] HCA 50
2 Under Australian law, one of the conditions that must be met for an invention to be a patentable invention is set out in section 18(1)(a) of the Patents Act 1990, which states that “the invention, so far as claimed in any claim … is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies”
3 Ibid, [287]
4 Ibid.