1. Patent eligibility of diagnostic methods in
Australia versus the United States
Ylva Strandberg Lutzow CULLENS
Introduction
Recent advances in genomics and proteomics have
made it possible for scientists and biotechnology com-
panies to develop diagnostic tools and new treatments
for cancer, genetic disorders and infectious diseases that
provide significant benefits to the global population.
Thus, to ensure that there is continued development and
investment in the diagnostics and personalised medicine
areas, it is imperative that patent protection remains
available for new, and potentially life-saving, innova-
tions in these important areas of research.
This article discusses the availability of patent pro-
tection for diagnostic methods in Australia and the
United States (US), with a particular focus on three
recently issued US Court decisions that are having an
impact on the biotechnology industry worldwide.
Key points
• The tests for patentable subject matter are different
in Australia and the US. Australian courts rely
upon the “manner of manufacture” principle set
out in National Research Development Corpora-
tion (NRDC),1
while US courts use the two stage
test set forth in Mayo Collaborative Services
v Prometheus Laboratories Inc (Mayo)2
to deter-
mine whether a diagnostic method claim meets the
subject matter eligibility threshold.
• In Australia, diagnostic methods are, “in general”,
considered to be directed to an “artificially-created
state of affairs for economic benefit” in accor-
dance with the NRDC principles and are therefore
capable of defining patentable subject matter.
• Diagnostic methods are becoming increasingly
difficult to patent in the US and there are now three
separate decisions of the US courts in which
diagnostic method claims have failed to meet the
subject matter eligibility requirement under the
Mayo test.
• In light of these US court decisions, which have
created significant uncertainty in terms of which
US diagnostic patents fall foul of these decisions
and which do not, clients are encouraged to seek
early advice from their patent attorney to ensure
that a sound patent strategy can be developed for
each jurisdiction of interest.
Australia
To meet the patentability requirements in Australia
pursuant to s 18(1)(a) of the Patents Act 1990 (Cth)
(Patents Act), a diagnostic claim must be for “a manner
of manufacture” within the meaning of s 6 of the Statute
of Monopolies. In Australia, the general test for patent-
able subject matter is that an invention is patentable (ie,
a manner of new manufacture) if it provides something
that is industrially useful or provides an “artificially-
created state of affairs” in a field of economic signifi-
cance. This test was broadly construed by the High
Court of Australia in the leading Australian NRDC
decision. The NRDC principles have been consistently
applied ever since and there is now a large body of
Australian case law illustrating their operation. In this
regard, it is worth noting that two recent decisions in the
biotechnology field have ruled that methods of medical
treatment and isolated nucleic acids meet the patent
eligible subject matter threshold in Australia.
Specifically, on 4 December 2013 the High Court of
Australia confirmed that methods of medical treatment
constitute patentable subject matter in Apotex Pty Ltd
v Sanofi-Aventis Australia Pty Ltd.3
This decision was followed by the Myriad breast and
ovarian cancer gene patent case D’Arcy v Myriad
Genetics Inc.4
In this Full Federal Court decision, the
five judges applied the decision of the High Court in the
NRDC and unanimously held that the claimed isolated
nucleic acid was, in itself, an artificially created state of
affairs that is associated with economic utility, therefore
satisfying the requirements for patentability under the
Patents Act. This decision made it very clear that the
manner of manufacture test for patent-eligibility under
Australian law is different from the test that applies in
the US under 35 USC 101, and as interpreted in Mayo.
However, the High Court has since granted Yvonne
D’Arcy special leave to appeal (D’Arcy v Myriad
Genetics Inc)5
after which a Full Bench of all seven
judges of the High Court of Australia heard oral argu-
ments on 16 June 2015 and 17 June 2015. A decision is
expected late 2015 and the Australian biotechnology
intellectual property law bulletin November/December 2015246

2. community is of course hoping that the High Court
judges will uphold the unanimous decision of the Full
Federal Court (and of the judge at first instance) and rule
in favour of Myriad.
While diagnostic methods per se have not been
judicially reviewed, it is clear that “in general”, diag-
nostic claims are considered to be directed to an “artificially-
created state of affairs”. That is, they are man-made
processes that produce useful and concrete results of
economic significance, eg, a method that includes physi-
cal steps of, for example, isolating a serum sample,
measuring the expression levels of a panel of biomarkers
(eg, proteins and/or nucleic acid sequences) and deter-
mining whether an individual has (or is predisposed to)
a specific disease and/or will or will not benefit from a
particular therapy based on the individual’s unique
genetic profile. It is also worth noting that, in contrast to
Myriad’s isolated nucleic acid claims discussed in the
previous paragraph; the diagnostic method claims of
Myriad’s patent were never challenged.
Thus, at least for the foreseeable future, we expect
patent applications to continue to be filed and granted in
respect of many diagnostic inventions in Australia,
subject to the usual requirements of novelty, inventive
step and utility, and so on.
The United States (US)
As alluded to above, unlike in Australia, the patent-
ability of diagnostic methods in the US has been
significantly weakened in light of three recent court
decisions, which are discussed in further detail below.
Mayo
In Mayo, the biomarker of interest was a drug
metabolite6
and the claimed diagnostic test was based on
the discovery of a correlation between the level of the
metabolite in the patient’s blood and optimal drug
dosage. It was in this case that the Supreme Court set
forth a framework for distinguishing patents that claim
laws of nature, natural phenomena, and abstract ideas
from those that claim patent eligible applications of
those concepts. It was determined that the first step is for
the court to determine whether the claims at issue are
directed to a patent ineligible concept, such as a natural
phenomenon. If the answer is yes, the next step is for the
court to consider the elements of each claim, both
individually and “as an ordered combination” to deter-
mine whether the additional elements recited in each
claim “transform the nature of the claim”7
into a patent
eligible application. The Supreme Court has described
the second step of this analysis as:8
… a search for an “‘inventive concept’”— i.e., an element
or combination of elements that is “sufficient to ensure that
the patent in practice amounts to significantly more than a
patent upon the [ineligible concept] itself”.
Applying this test, the court found the claims at issue
in the Mayo patent ineligible.
University of Utah Research v Ambry Genetics
Corporation9
This decision, which relates to Myriad’s BRCA1 and
BRCA2-based hereditary breast and ovarian cancer test
patent, further emphasised the challenges of obtaining
diagnostic method claims in the US. Based on the
analysis set out in Mayo, the court held that Myriad’s
diagnostic method claims failed to meet the patent
eligibility requirement under the Mayo test because the
first part of the claim merely related to an “abstract idea”
(ie, the comparison of a wild-type/normal BRCA1
sequence with a patient’s BRCA1 sequence), while the
second part of the claim (ie, the hybridisation and
detection techniques used to compare the sequences)
only referred to “well understood, routine and conven-
tional techniques” that failed to add any further inven-
tive concept.
Ariosa Diagnostics Inc v Sequenom Inc10
On 12 June 2015, the US Federal Circuit issued its
decision in Ariosa Diagnostics Inc v Sequenom Inc
finding that Sequenom’s method claims in US Patent
No 6,258,540 for detecting paternally-inherited cell-free
fetal DNA (cffDNA) in maternal plasma or serum were
not directed to patent eligible subject matter, and there-
fore invalid.
For a bit of background, the technology at issue is a
non-invasive prenatal diagnostic test for sex determina-
tion, blood typing, other genetic disorders (including
Down syndrome) and detection of preeclampsia using a
simple blood test that reduces or eliminates the need for
sampling from the fetus or placenta, which incur signifi-
cant risks to both mother and child. Sequenom Inc is the
exclusive licensee of US Patent No 6,258,540 (the
patent).
The claims of the patent are based on a ground-
breaking discovery by the inventors that cffDNA is
present in maternal plasma or serum, that was previously
routinely discarded as medical waste, and their subse-
quent implementation of a method for detecting a small
fraction of cffDNA in the maternal plasma or serum.
In making its decision, the court again applied the
two-part test as set forth in Mayo and held that the
method claims in the patent “begins and ends with a
natural phenomenon”,11
and that the additional elements
in the method steps “individually and ‘as an ordered
combination’”12
were not enough “to supply an inven-
tive concept”.13
To add insult to injury, the court also stated:14
While Drs. Lo and Wainscoat’s discovery regarding cffDNA
may have been a significant contribution to the medical
intellectual property law bulletin November/December 2015 247

3. field, that alone does not make it patentable. We do not
disagree that detecting cffDNA in maternal plasma or
serum that before was discarded as waste material is a
positive and valuable contribution to science. But even
such valuable and contributions can fall short of statutory
patentable subject matter, as it does here.
This decision shows the sweeping impact the Supreme
Court’s decision in Mayo has had on the patent eligibil-
ity of diagnostic methods and further limits the possi-
bility of securing diagnostic patents in the US. Unfortunately,
this decision is likely to have devastating effects on the
diagnostics and personalised medicine industry.
Not unexpectedly therefore, on 13 August 2015,
Sequenom Inc requested an en banc rehearing,15
hoping
that the Full Court will overturn the prior panel’s ruling.
In making the request, Sequenom cautions that the
Federal Circuit’s panel decision “reads recent Supreme
Court precedent to create an existential threat to patent
protection for an array of meritorious inventions”16
beyond those in the personalised medicine and diagnos-
tics industries.
Sequenom further argues that, instead of promoting
better access to “fundamental discoveries”, the panel’s
decision will encourage inventors to keep their discov-
eries secret and discourage venture capitalists from
investing in biomedical research. To conclude, Sequenom
urges the full court to “take this opportunity to protect
patent law’s fundamental principles from being eroded
by results neither the Supreme Court nor Congress could
possibly have intended”.17
The biotechnology industry is anxiously waiting to
see if the court grants the petition and reaches a different
decision on the merits.
Conclusion
It is pleasing to see that diagnostic methods continue
to be patentable in Australia. Nevertheless, the manner
in which the US courts have recently applied Mayo to
determine the patentability of molecular diagnostic tests
could threaten the diagnostics and personalised medi-
cine industry worldwide, particularly if applied by other
courts.
Meanwhile, the US Patent and Trademark Office
(USPTO) has been proactive in issuing its own patent
eligibility guidelines,18
though these guidelines have not
been tested in a court of law. In Australia, patent
eligibility guidelines are provided by IPAustralia through
the Patent Manual of Practice & Procedure.19
Ylva Strandberg Lutzow
Associate
Cullens Patent and Trade Mark Attorneys
y.strandberg@cullens.com.au
www.cullens.com.au
In a High Court decision that issued on 7 October 2015
(D’Arcy v Myriad Genetics Inc), seven judges unani-
mously overturned the decision of the Full Federal
Court, holding that isolated nucleic acids are not a
manner of manufacture under Australian law. Only the
claims to isolated nucleic acids were challenged by
Yvonne D’Arcy. No diagnostic method claims were
challenged. In the majority decision, four judges rein-
terpreted NRDC’s concept of manner of manufacture,
setting a precedent for the courts and Australian Patent
Offıce to apply a new approach when considering
whether a claimed invention is a manner of manufac-
ture. It remains to be seen whether the judgment will
affect the patent eligibility of other types of natural
products and natural phenomena. It is possible that
natural products and natural phenomena could have
further bearing on diagnostic methods but that remains
to be seen. Of note, in the minority decisions the judges
commented, in obiter, that diagnostic methods and
probes were potentially patentable subject matter.
Footnotes
1. National Research Development Corporation v Commissioner
of Patents (1959) 102 CLR 252; [1960] ALR 114; (1959) 1A
IPR 63; BC5900480.
2. Mayo Collaborative Services (dba MAYO Medical Laborato-
ries) v Prometheus Laboratories Inc (2012) 97 IPR 252; 182 L
Ed 2d 321; 132 S Ct 1289.
3. Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 304
ALR 1; 103 IPR 217; [2013] HCA 50; BC201315312.
4. D’Arcy v Myriad Genetics Inc (2014) 313 ALR 627; 107 IPR
478; [2014] FCAFC 115; BC201407309.
5. D’Arcy v Myriad Genetics Inc [2015] HCA 35; BC201509675.
6. By “metabolite” it is meant the physiological breakdown of a
drug in a patient’s blood.
7. Supreme Court of the United States, Syllabus Alice Corpora-
tion Pty Ltd v Cls Bank International et al October 2013,
http://www.supremecourt.gov/opinions/13pdf/13-
298_7lh8.pdf.
8. Above, n 7, p 7.
9. University of Utah Research Foundation v Ambry Genetics
Corporation (Fed Cir 2014).
intellectual property law bulletin November/December 2015248

4. 10. Ariosa Diagnostics Inc v Sequenom, Inc, 12 June 2015 (Fed
Cir 2015).
11. Above, n 10, at p 9.
12. Above, n 10, at p 8.
13. Above, n 10, at p 11.
14. Above, n 10, at p 16.
15. Petition for rehearing en banc- Ariosa Diagnostics Inc v Sequenom
Inc, 13 August 2015 (Fed Cir 2015).
16. United States Court of Appeals for the Federal Circuit, Appel-
lants’ Petition For Rehearing En Banc p 1, http://
patentdocs.typepad.com/files/sequenom-petition.pdf.
17. Above, n 13, p 15.
18. United States Patent and Trademark Office 2014 Interim
Guidance on Subject Matter Eligibility, www.uspto.gov/patent/
laws-and-regulations/examination-policy/2014-interim-guidance-
subject-matter-eligibility-0.
19. IP Australia, Australian Patent Offıce Manual of Practice and
Procedure,www.ipaustralia.gov.au/pdfs/patentsmanual/WebHelp/
Patent_Examiners Manual.htm.
intellectual property law bulletin November/December 2015 249