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Beadle, Libby --- "Selling the stem cell short? An assessment of the patentability of the results of Human stem cell research in New Zealand" [2004] CanterLawRw 1; (2004) 10 Canterbury Law Review 1


Libby Beadle[*]

I. Introduction

Human stem cell research is being promoted as a means to cure inherited and degenerative diseases, and replace or repair damaged organs and tissues. Not only does stem cell research have the potential to save lives, but the development of stem cell-based treatments will promote the growth of the biomedical industry, which will contribute to the New Zealand economy at large. The patent system 'promotes innovation and economic growth while providing an appropriate balance between the interests of patent owners and the interests of society as a whole.'[1] This paper attempts to reconcile the vast potential of human stem cell research with the economic incentives provided by the patent system, in order to identify an advisable approach in considering the patentability of the results of the research. First, the basic science underlying human stem cell research and the potential results of the research are described. Part III critically examines the current and proposed patentability requirements in New Zealand, while Part IV applies the legal requirements to the field of human stem cell research and offers possible routes by which the problems associated with the breadth of already granted patents may be overcome.

II. Stem Cell Research

The human body is composed of more than 200 different types of cells. These specialised cells differ according to the tissue or organ that they comprise.[2] Each type of specialised cell is committed to perform a special function, and once committed is unable to become a different type of specialised cell. For example, a blood cell can never convert to a nerve cell. Stem cells are less committed. As the name implies, stem cells are the foundational cells of organisms, the cells from which all different types of cell contained in the organism originate. Technically, a stem cell is an undifferentiated cell that can divide without limit, simultaneously renewing itself and giving rise to specialised cells.[3] The process by which stem cells become specialised cells is called differentiation, which is prompted by specific cellular signals that activate and repress genes within the nuclei of the stem cell. This process leads to the production of specific proteins, which determine the type of specialised cell the stem cell will become. A basic understanding of human development is necessary in order to address the issues associated with stem cell research as stem cells derived from different stages of development demonstrate distinct abilities to differentiate into the various types of specialised cells. Normal human development is initiated when a sperm cell fertilises an egg cell, creating a zygote.[4] This zygote divides exponentially, forming identical cells which continue division until a cellular termination signal is received. These early embryonic cells are termed totipotent, as each cell has the potential to develop into a new organism.[5] After five or six days the cells congregate to form a blastocyst. About nine days into development, the blastocyst splits into two layers of cells, forming a hollow sphere consisting of two types of cells: the outer cells and the inner cell mass.[6] Cells taken from the inner cell mass are called pluripotent cells.[7] Pluripotent stem cells:

(i) are capable of indefinite proliferation in vitro in a differentiated state; (ii) maintain a normal karyotype through prolonged culture; and

(iii) maintain the potential to differentiate to derivatives of all three primary embryonic germ layers (endoderm, mesoderm, ectoderm) even after prolonged culture.[8]

Through further differentiation all of the cells found in the human body are formed from these three primary germ layers of the embryo. However, unlike totipotent cells, pluripotent cells can not develop into extra-embryonic tissue.[9] Pluripotent stem cells do not, therefore, possess the ability to develop into an entire organism.

The most common source of embryos for stem cell extraction is embryos created through in vitro fertilisation. These embryos may be excess embryos from fertilisation treatments (sometimes termed supernumerary embryos), or they may be embryos created specifically for research. Although extraction from the inner cell mass is the primary source of pluripotent stem cells, pluripotent cells have also been obtained from aborted foetuses. These cells are termed embryonic germ cells as they are obtained from primordial germ cells extracted from the gonadal ridge of the foetus. The cells behave similarly to the embryonic stem cells derived from the inner cell mass.[10] As both the above methods have been patented in the United States,[11] researchers are attempting to discover alternative methods of obtaining pluripotent stem cells. Hence BresaGen, Inc, has apparently extracted pluripotent stem cells at a later stage in embryonic development.[12] As development proceeds beyond the blastocyst, stem cells comprise a decreasing proportion of cells in the embryo, foetus and human body. In adults, stem cells provide the means by which tissues generate new cells to replace damaged ones. As specialised cells do not themselves divide, when tissues are harmed by injury, disease or natural cell death, they are replenished from populations of stem cells throughout the body.[13] Stem cells thus play a central role in human growth, development and recovery. As cells become more specialised, the genes that they can express become more restricted.[14] These stem cells therefore possess a decreased ability to differentiate into different cell types, and are referred to as multipotent stem cells as they can give rise to multiple, but not all, cell types.[15] For example, some of the pluripotent stem cells differentiate to become neural stem cells, which can then produce the variety of cells that make up the central nervous system, but cannot produce blood or liver cells. Thus, while pluripotent cells have been described as 'infant cells that have not yet chosen a profession', multipotent stem cells 'even though not yet adult, are like young professionals already embarked on a career: they still have options, but fewer of them'.[16]

Multipotent stem cells can be sourced from aborted foetuses, extra-embryonic tissue, such as the placenta and umbilical cord, and adult tissue, by simple removal or extraction. Although recent evidence has shown that multipotent stem cells may actually be able to generate more cell types than would be expected given their developmental hierarchy,[17] once extracted, multipotent stem cells are more difficult to isolate and purify than pluripotent stem cells. Further, multipotent stem cells can only divide a limited number of times, unlike pluripotent stem cells which can undergo an unlimited number of divisions for an indefinite amount of time.[18] However, although multipotent stem cells may be more susceptible to disease than pluripotent stem cells, they do not possess the tendency of embryonic stem cells to become malignant.[19] Thus, research on both multipotent and pluripotent stem cells is currently permitted in most countries.[20]

Results of Human Stem Cell Research

Human stem cell research has a number of potential applications. First, it appears to be widely agreed in scientific circles that the research will be invaluable to basic science.[21] Pluripotent stem cell research may increase understanding of the biology of normal human development. In particular, the research could provide information about the growth factors, nutrients, and other signals that lead to cellular specialisation and tissue specification. At present, most of the information about cellular differentiation comes from work performed on other animals and analogised to humans.[22] Using human stem cells allows scientists to conduct more realistic experiments with more definitive results. Obviously, such basic research also has a secondary effect on clinical research. Research into cellular differentiation could provide information about some serious medical conditions caused by errors in cell differentiation and division, such as cancer and developmental defects, and suggest new strategies for therapies. It could also offer insights relating to infertility and pregnancy loss.[23] Indeed, the processes of cellular differentiation and development must be understood as a prerequisite for almost all applications of the research. Secondly, human stem cell lines could provide anew means of developing and testing the safety and efficacy of drugs. Drug efficacy and potency could be tested by manipulating stem cell lines to behave analogously to cells of certain diseases and testing putative drugs on the cells.[24] Specialised liver cells could be developed to evaluate drug detoxifying capacities.[25] Human cell lines would provide clinically more relevant biological systems than animal models for drug testing, and only the safest and most promising candidate drugs would then advance to animal and human trials.[26] As stem cells have the ability to divide much faster than cells in animal or human test subjects, rapid screening of candidate drugs could streamline the drug development process, reducing research and development costs for pharmaceutical corporations.[27] It is likely that drug development will present the major medical impact of human stem cells in the short term. A further possible therapeutic application involves the use of stem cells in gene therapy, where stem cells are used as a vehicle for delivering genes to specific tissues in the body. This application is currently being investigated as a treatment conferring resistance to the HIV virus, and as a therapy for various cancers.[28] However, the application of human stem cell research that has received the most attention is the potential transplantation of cells and tissues created in vitro, known as regenerative medicine. The regenerative capacity of human stem cells has long been exploited in using bone marrow transplants to repopulate the cells in the blood and immune system following irradiation of leukaemia patients.[29] Other possible treatments involve neurological diseases, diabetes, and tissue damage following trauma. For example, Parkinson's disease involves the degeneration of dopamine-producing neurons in the brain, and Type 1 (insulin-dependent) diabetes involves the impairment of insulin-secreting pancreatic cells;[30] stem cell transplants offer a unique opportunity to replace such damaged cells. In addition, once researchers have determined the specific processes of cellular differentiation and gene activation, the more remote possibility of growing entire organs in vitro might be realised.[31] If successful, transplantation from human stem cell sources could overcome problems associated with the shortages of donated organs, and the inability to treat certain conditions, such as spinal cord injuries or tissue damaged by stroke, by standard organ transplantation.

The greatest benefits involving transplantation are likely to be realised in combination with cloning techniques. Human cells express proteins on their surface known as human-leukocyte-associated (HLA) antigens. It is very rare for two individuals to have an identical set of HLA antigens; the antigens therefore provide a mechanism for the body to recognise and reject foreign tissue. Immunosuppression drugs are used to prevent this immune system rejection, however such medication often has significant side effects, including increased susceptibility to infections and cancer.[32] Donor cells that are genetically the same as the recipient are much less likely to be rejected, as the HLA antigens are also identical. Cloning techniques provide a means to obtain genetically identical cells, potentially alleviating the difficulties associated with the rejection of transplanted tissue.[33] There are three possible techniques that could be utilised in order to obtain such genetically identical cells. Somatic cell nuclear transfer (SCNT)[34] involves the transfer of the nucleus from an adult patient into an enucleated human egg cell. This produces an early embryo in which the nuclear DNA is genetically identical to the nuclear DNA of the patient.[35] A second cloning technique is known as blastomere separation. This process mimics the natural occurrence of identical twins. A single developing egg cell is coaxed into division soon after fertilisation.[36] The embryo is then stimulated to develop to the blastocyst stage, where stem cells are extracted. An additional possibility involves the use of a process known as parthenogenesis. Parthenogenesis involves jolting an unfertilised egg cell into a fertilised state without the use of a sperm cell. This process may provide a means to replicate a woman's cell line, by extracting stem cells from the blastocyst stage. The parthenote does not possess the ability to develop to term as the absence of the male chromosomes causes the woman's body to reject the parthenote.[37] All of the above processes are referred to as therapeutic cloning techniques. Therapeutic cloning is the use of the embryo for research and therapeutic purposes, where the embryo itself only develops to the blastocyst stage. This is contrasted with reproductive cloning, which refers to actual implantation of the embryo into a woman's uterus with the intention of producing a human baby.[38] As a general rule, therapeutic cloning is accepted, while reproductive cloning is almost universally opposed.[39]

Biotechnology is an important industry for New Zealand given the significance of the primary production sector in the economy.[40] Although the major thrust of New Zealand biotechnology research is directed towards agricultural and horticultural research, biomedical research also provides a significant research avenue, given its potential to deliver not only basic research tools, but also diagnostic tests and pharmaceuticals. At present, research on non-viable embryos has been approved in New Zealand,[41] and although embryonic stem cell research is not currently undertaken, research on animal and adult stem cells is currently underway.[42] Although early research supports the potential results outlined above, much basic research is still required, and clinical and therapeutic applications of stem cell research are still some years away. Evidence shows that over the next few years, almost all studies on human stem cells will be in the stage of basic research.[43] However, although stem cell research is only a very new development in biotechnology, it is likely to have a substantial impact on the medical and biotechnological fields in the future.

III.The New Zealand Patent System

A patent is the grant by the government of an exclusive right to prevent others from making, using or selling an invention for a period of up to 20 years.[44] A patent can be considered as an asset that can be bought, sold, transferred, or licensed like any other property.[45] Patent applications generally include a request for the grant of a patent, a full description of the invention, drawings necessary to illustrate the invention, and one or more claims which define the scope of the patent.[46] Patents can be granted for both products and processes. A product patent claims a substance or composition produced by human intervention, while a process patent is applicable to all kinds of activities where the use of some material product for effecting the process is implied.[47] A product claim is therefore wider than a process claim as it gives a monopoly over the product, all possible processes used to obtain the product, and all potential uses of the product, while a process claim is restricted to that particular process. However, the courts have progressively widened such process patents. A process patent now also covers the particular end results directly obtained by that process.[48]

However, a patent does not provide the patentee with a licence to use the invention in any way. This right to practice the invention is independent of the patent:

The truth is that letters patent do not give the patentee any right to use the invention-they do not confer upon him a right to manufacture according to his invention. This is a right which he would have had equally effectually if there were no letters patent at all, only in that case all the world would equally have the right.[49]

For example, the Medicines Act 1981 requires that any new pharmaceutical must receive approval from the Minister of Health in order to be marketed, regardless of patent approval.

Rationale for the Patent System

While one rationale for the patent system holds that a patentee should be entitled to the product of his or her endeavour, that is, 'nobody should reap without sowing',[50] it is the assumption that without the patent system no, or less, sowing would occur which provides the primary rationale for the existence of the system.[51] In effect, a patent is a limited form of monopoly right, which is considered to be justified due to the corresponding benefits to society.[52] In return for the grant of the patent, the owner must provide a complete description of the invention, which is made available to the public.[53] This is known as the social contract or 'quid pro quo'[54] of the patent system. This underlying basis has been judicially recognised in New Zealand:

The patent system rests on the policy that a limited term monoploy will be granted as an incentive to innovation but subject to the invention and the best method of carrying it out being disclosed and made available for public use at the end of the term of protection.[55]

The objective of the patent system is thus to encourage innovation while benefiting the public. Patents are therefore justified by providing businesses with an incentive to invest in research and development, which is ultimately good for the economy. The promotion of innovation and technology by this incentive for research and development is the main justification for the patent system.[56]

Although the rationale possesses less strength in areas where public funding is already available as an incentive, private research is hindered by economic constraints. In New Zealand, government funding of science is increasingly being overtaken by funding from the private sector. The biotechnology industry is thus becoming less of an academic community with a communal approach to research developments and becoming increasingly profit-driven.[57] The traditional view holds that as copying, or 'inventing around' biotechnological inventions is generally relatively easy, strong intellectual property rights are required to protect the inventions and recoup the often substantial research and development costs. Thus, although strong patent protection may increase prices, for example, of health care, it is equally likely that in the absence of such protection, fewer cures would be available and society would be less healthy.[58] A strong intellectual property system is also needed in order to encourage the transfer of offshore technology to New Zealand. This impetus is particularly important given New Zealand's relative insignificance in the global biotechnology industry, in which the major players are Japan, the United States, and Europe .[59] However, for public policy reasons, the availability of this protection is limited.

Requirements for Gaining a Patent

Patent law in New Zealand is governed by the Patents Act 1953 (Act) which is itself substantially modelled on the English Patents Act 1949. Although England has since enacted the Patents Act 1977, New Zealand has yet to follow with an updated Act. Thus, at present, patent protection in New Zealand is relatively outdated and potentially broader than that obtained overseas. While internationally the requirement for patentability has increasingly moved towards a code with three criteria of novelty, an inventive step, and industrial applicability, under the present system in New Zealand a patent may be granted provided an invention is novel[60] and a 'manner of new manufacture'.[61] A patent application will be allowed to proceed unless on no reasonable view can it be regarded as meeting the requirements of the Act.[62] However, notable movements are presently being made in the area of patent law reform and although originally forecast for early 2004,[63] amendments are now expected to be completed in 2005.[64] New Zealand is a party to the Paris Convention for the Protection of Industrial Property (Convention) and the World Trade Organisation Agreement on Trade Related Aspects of Intellectual Property Rights (Agreement), both of which require parties to provide minimum levels of patent protection to inventors.[65] Any exclusions from patentability must also be in accordance with the Agreement. In addition, in 2000, the New Zealand and Australian governments signed a Memorandum of Understanding on Business Law Coordination (Memorandum). The Memorandum lists 'the granting and recognition of registered intellectual property rights' as an area for coordination.[66] Thus, the possibility of harmonising New Zealand's law with that of Australia should be considered in any examination of the New Zealand patent system.

Patentable subject matter

To receive patent protection an invention must first involve appropriate subject matter. In New Zealand the question of appropriate subject matter is determined by reference to s 6 of the Statute of Monopolies 1623 (UK). Thus, an invention is defined under the Act as:

any manner of new manufacture the subject of letters patent and grant of privilege within s6 of the Statute of Monopolies and any new method or process of testing applicable to the improvement or control of manufacture.[67]

Section 6 of the Statute of Monopolies banned all monopolies except for patents for inventions, with the intention of encouraging national economic development,[68] providing:

... that any declaration before mentioned shall not extend to any letters patent and grants of privilege... of the sole working or making of any manner of new manufactures within this realm, to the true and first inventors of such manufactures which others at the time of making such letters patent or grant shall not use, so as also they be not contrary to the law, nor mischevious to the state, by raising prices of commodities at home, or hurt of trade, or generally inconvenient.

The question of patentable subject matter in New Zealand is thus determined by reference to the principles of policy developed by the courts in considering the purpose of the Statute of Monopolies, rather than by strict verbal interpretation. Therefore, the question to be asked when determining whether an invention constitutes patentable subject matter is '[i]sthis a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?'[69] Patents will accordingly be granted only for inventions that give real economic benefits to society.


The novelty requirement requires that an invention possess something new,[70] that is, something which is not already known by persons of ordinary intelligence skilled in the art. The requirement necessitates a determination of whether the invention has truly contributed something new to the public domain, as there is no social benefit in granting a monopoly in respect of an invention that is already available in existing knowledge.[71] At present, New Zealand possesses a local novelty standard. However, an amendment has been approved within an earlier stage of review incorporating an absolute novelty standard. Under absolute novelty, an invention will only be considered to be new if no description of the invention has been published anywhere in the world before the filing date.[72] In general, novelty will remain intact as long as no single invention in the prior art contains the exact identical elements of the new invention.[73]


An invention must also be properly described in order to be awarded a patent. This requirement ensures that patents are not granted in situations where the public is not truly put in possession of the new knowledge provided by the invention.[74] The aim is to ensure that the scope of the claims, and therefore the patent, is not broader than the invention possessed and disclosed. In New Zealand, this requirement is embodied in s 10(3) of the Act, which provides that every complete specification must:

(a) particularly describe the invention and the method by which it is to be performed;
(b) disclose the best method of performing the invention which is known to the applicant and for which he is entitled to claim protection; (c) end with a claim or claims defining the scope of the invention claimed.

The specification must be worded so that a person of ordinary intelligence skilled in the art is able to read and act on it.[75] In addition, s 10(4) of the Act requires that 'the claim of a complete specification must relate to a single invention, be clear and succinct, and be fairly based on the matter disclosed in the specification.' The test to determine whether claims are fairly based involves inquiring whether:

(a) the alleged invention, as claimed, is described in the application;
(b) there is anything in the application that is inconsistent with the alleged invention as claimed; and
(c) whether the claim includes as a characteristic of the invention a feature as to which the application is silent.[76]

No New Zealand cases have yet discussed the requirement in a biotechnology context.


Currently, there is no requirement that an invention be useful in order for it to be granted a patent in New Zealand. However, inutility does provide a ground for revocation of a patent, once granted,[77] and thus is commonly considered at the examination stage. The requirement aims to prevent patentees from patenting inventions for which there is no practical utility at the time of filing, in accordance with the commercial objectives of patent law. The utility requirement has traditionally been interpreted liberally; as long as a product or process has some utilitarian purpose, the invention is deemed patentable.[78] Simply, if an invention can be used, it will have utility. The utility requirement may sometimes be problematic as although only a single use need be demonstrated, when a patent is granted on the basis of that one use, the patent rights extend to all possible uses.[79] It is therefore especially important that the Intellectual Property Office of New Zealand (IPONZ) and the courts require an adequate use before allowing an invention to be patentable. The Patents Act review proposes that utility be introduced into the reformed Act as a requirement necessary for the granting of a patent. The review also proposes to introduce more exacting requirements for the fulfilment of the requirement, whereby utility will need to be shown to be credible, specific, and substantial.[80] This change would bring New Zealand into line with other jurisdictions.[81]

Non-obviousness/Inventive step

At present, although obviousness or lack of an inventive step is a ground for opposition and revocation of a patent,[82] it need not be considered in the examination of a prospective patent. However, Stage 2 of the Patents Act review proposed that an invention must be shown to possess an inventive step prior to the granting of a patent.[83] The requirement is rooted in policy considerations; slight changes from commonly available prior art should not constitute grounds for a patent.[84] The non-obvious requirement will not be met if the invention would be obvious, that is, recognised as something that could be done or at least worth trying, by someone who possessed ordinary skill in the relevant art based on information found in the prior art at the time of filing.[85]

Thus, under the proposed Act, an invention will prima facie be patentable if, on the balance of probabilities, it is a manner of new manufacture within the meaning of s 6 of the Statute of Monopolies, which is novel, non-obvious, and possesses a credible, specific and substantial use.[86] These amendments would bring New Zealand's patent law into line with its overseas trading partners, including Australia, in accordance with the Memorandum. Further, to be patentable, the invention must not fall within any of the exclusions from patentability.

Exclusions from Patentability

Morality or Ordre Public

At present, only one exclusion from patentability exists in the Patents Act. Section 17(1) provides that 'if it appears to the Commissioner in the case of any application for a patent that the use of the invention in respect of which the application is made would be contrary to morality, the Commissioner may refuse the application'.

No ethical or moral issues are explicitly identified in the Act; s 17(1) confers a wide, purely discretionary power on the Commissioner. However, the review of the Act contains a recommendation specifically excluding from patent protection inventions where the commercial exploitation of those inventions would be contrary to morality or ordre public, or where prevention of such exploitation is necessary to protect human, animal or plant life, or to avoid serious prejudice to the environment.[87]

It will also be possible to revoke a patent on this ground.[88] The proposed exclusion is thus broader than the current exclusion.[89] When considering whether to refuse an application under this ground, the Commissioner must seek advice from appropriate authorities outside the Intellectual Property Office .[90] In the case of biotechnological inventions, the recently established Bioethics Council (Toi te Taiao) may present a likely candidate for such consultation. The Cabinet Paper further provides that a patent is likely to be refused or revoked on this ground only if exploitation of the invention would be offensive to a substantial section of society.[91] The existing morality exception has only been used very rarely in the past.[92] A common argument against the existence of such provisions in patent law contends that questions of morality and ethics have no place in the law. Morality is a personal, subjective standard of a temporal nature; inventions accepted today may have been widely opposed at the time of their introduction. Patent law is concerned with determining whether a given invention meets the technical requirements of patent law, in line with the underlying economic rationale of the system. The purely exclusionary rights conferred by a patent also mean questions of morality have no relevance to the granting of a patent. Questions of morality and social policy should be determined by the legislature, in deciding the extent to which such inventions should be regulated. Indeed, this argument provides the basis for the traditional reluctance of patent offices and courts ruling on patent disputes to determine cases on questions of morality.[93] However, the same underlying rationale serves to defeat such an argument. Patent law provides inventors with a means to recoup investment costs by conferring on the inventor the sole right to make, use and sell their inventions. The patent system aims to encourage investment in innovative inventions by rewarding inventors who contribute to the common stock of knowledge. Thus, the system is premised on the assumption that, without the system, no or less investment in such areas would occur. Such issues must then be relevant in direct proportion to the extent to which they provide an incentive to invest in morally dubious technologies.[94] Science is not practised in a vacuum; moral and ethical considerations cannot be ignored in a modern patent system. Thus 'patent offices are placed at the crossroads between science and public policy' .[95]

An additional consideration relates to the relevance of legislative regulations relating to the inventions. The original morality provision in the New Zealand Patents Act allowed the Commissioner to refuse an application for an invention the use of which would be 'contrary to law or morality'.[96] Although the section has since been amended, it is arguable that the exclusion relating to the patenting of inventions that are contrary to law has remained due to its incorporation in the proviso to s 6 of the Statute of Monopolies, which is part of New Zealand law by s 2(1) of the Patents Act. However, the extent to which the proviso has been incorporated into New Zealand patent law is unclear. Judicial dicta can be found supporting both views. The Court of Appeal in Pharmac relies on the coexistence of the original s 17(1)(b) of the Patents Act 1953 and the proviso, and concludes that the drafters would not have intended superfluity,[97] while Ellis J in Pfizer Inc v Commissioner of Patents suggests that the combined definition limits the patentability of an invention.[98] A probable conclusion is that the existence of laws regulating the invention sought to be patented will be relevant to, though not determinative of, the morality issue.

Morality is given an extremely limited compass within United States patent law. Although it is possible that moral and ethical considerations may be considered within the 'moral utility doctrine' laid down in Lowell v Lewis,[99] the doctrine has largely been ignored with respect to modern inventions.[100] The European Biotechnology Directive[101] (Directive) also contains an exclusion from patentability for inventions the commercial exploitation of which is contrary to ordre public or morality. The exclusion is essentially a duplication of the provision in Article 5 3 (a) of the European Patent Convention (EPC), and thus has previously received judicial attention in Europe. Ordre public is a term of art in European patent law. It has been equated to public policy,[102] which was defined by the European Patent Office (EPO) as 'the protection of public security and the physical integrity of individuals as part of society.'[103] However, Recital 39 of the Directive indicates that a single ethical thread binds both morality and ordre public considerations, and the terms have tended to be considered as a whole. Two distinct tests have emerged in the European cases in determining when an invention will be unpatentable under the morality criterion.[104] The 'public abhorrence' test denies the grant of a patent where public consensus determines that the grant would be abhorrent. Thus:

[O]nly in those very limited cases in which there appears to be an overwhelming consensus that the exploitation or publication of an invention would be immoral may an invention be excluded from patentability under [the morality criterion].[105]

The public abhorrence test is contained in the EPO Guidelines for patent examiners regarding the application of Article 53(a).[106] The 'unacceptability' test in contrast denies a patent where the disadvantages to society would outweigh the advantages of the patent,[107] or where the grant of a patent would be unacceptable in light of the 'conventionally accepted standards of conduct in European culture.'[108] Clearly an invention is more likely to be currently viewed as unacceptable within society than it is to satisfy the public abhorrence test. The unacceptability test is thus a more stringent application of the morality criterion.

In New Zealand, the contention that an invention is likely to be refused under the new provision if it is 'offensive to a substantial portion of society' appears to suggest that the higher unacceptability test may be applied. However, given the traditional approach of the Commissioner and the courts, combined with the increasing trend with respect to the patenting of biotechnological inventions, the less stringent public abhorrence approach to the morality exclusion may be more likely.

Methods of Medical Treatment of Humans

Methods of medical treatment of humans, including surgical, diagnostic and pharmaceutical methods, are not patentable in New Zealand. The exclusion is not laid down by the Act, but is judicially created. Numerous explanations have been supplied for the exclusion. Traditionally such methods were excluded because they did not result in a vendible product, in accordance with the doctrine laid down in Re GEC's Application.[109]The methods were not a 'manner of new manufacture' and could not, therefore, fall within the definition of invention under the Act. However, in Wellcome Foundation Ltd v Commissioner of Patents[110] the Court of Appeal rejected the vendible product test as a general test of invention. Cooke J identified the medical treatment exclusion as resting on 'a deep seated sense that the art of the physician or the surgeon in alleviating human suffering does not belong in the area of economic endeavour or trade and commerce.'[111] However, cautioning that logic is not always a safe guide to the law, the Court held that such methods were excluded from patent protection as they did not constitute an invention.[112] The Court considered the issue to be one of public policy, and thus left any alterations to Parliament.[113]

The exception was gradually narrowed until treatments where the human was not ill, elective treatments, treatment of minor conditions where the active ingredient was available in over-the-counter products, and treatments involving health and hygiene became patentable.[114] The Court of Appeal in Pharmaceutical Management Agency Ltd v Commissioner of Patents[115] soon recognised that such claims could no longer be denied on the ground that they did not constitute an invention. While acknowledging that "there is little logic in maintaining the exclusion", the Court held that methods of medically treating humans were to be excluded from patentability on ethical grounds, to ensure that medical practitioners are not subject to restraint when treating patients.[116]

However, a further reason for the existence of the exclusion has also been identified:

Therapeutic methods, as well as diagnostic and surgical methods, are ... individual procedures whose success depends much more on the individual skills of doctors or surgeons than on the methods themselves. In other words, therapeutic methods are not to be mass applied...which characteristic confines their economic relevance to [an] extremely narrow market.[117]

Yet the present situation in New Zealand is that patents for medical treatment methods are refused under the morality exclusion in s 17(1).[118] Any change awaits 'a decision of the Court of Appeal in unequivocal terms, or a decision of Parliament.'[119] The Court of Appeal granted leave to appeal the Pfizer decision concerning the issue in early 2003.[120] However, it is possible that the Court of Appeal may be pre-empted by a specific statutory exclusion for diagnostic, therapeutic and surgical methods for the treatment of humans.[121] The exclusion is stated to be for 'ethical reasons',[122] although such an explanation is perhaps to be viewed with caution given the coexistent retention of the morality exclusion. A more viable explanation is likely to be rooted in economic considerations.[123] Given the relative insignificance of New Zealand in the international market for health related services, any changes to the medical treatment exclusion would arguably result in increased costs for New Zealand's health system without any corresponding benefits. The relevance of such considerations was recognised in Wellcome:

Not only is there the question whether medical and surgical methods should be treated as a special subject in patent law... but there must be an economic question of particular importance for a country the size of New Zealand, dependent to the extent it is upon overseas manufacturers.[124]

However, as New Zealand is a net importer of technology across all markets,[125] an argument could be mounted that disallowing patent claims according to this rationale amounts to discrimination against non-residents, contrary to the Paris Convention and the TRIPS agreement.[126] New Zealand does allow the patenting of 'Swiss claims'.[127] The Swiss claim formulation allows the patenting of a second or further medical application of a substance; that is, the use of the substance for the manufacture of a medicament for the treatment of a certain condition. The inventive subject matter and novelty in the claim is the new use to which the substance is put, which could not be claimed under the medical treatment exception. Arguably the exception leaves little incentive for companies to investigate the properties of known pharmaceutical compounds. Therefore, in this particular field where the new use for which the medicament is made cannot be captured with a method claim, the designation of purpose is sufficient for the grant of a patent.[128] New Zealand also allows the patenting of pharmaceutical and surgical products.[129] Thus, provided itmeetsthe other patentability criteria, amedical compound may be patented. This erodes the apparent protection afforded to medical practitioners by the method exception. A second medical use of the compound may also be patented via a Swiss claim formulation. It is apparent that the arbitrary boundaries currently drawn have given rise to an uncertain and illogical body of law. A logical approach might be to 'permit claims to extend to the method of treatment using the compound or composition but to require from the patentee a disclaimer of any right to sue the practitioner...[leaving] vulnerable as indirect infringers those providing the product for the purpose of the treatment.'[130]

Such an approach is in accordance with United States law, where a medical practitioner will not be subject to the payment of damages for a patent infringement concerning a medical activity committed in a hospital to which the practitioner is professionally affiliated.[131] Permitting the patenting of methods of medical treatment of humans would also bring New Zealand's patent law in line with that of Australia,[132] in accordance with the Memorandum. However, England[133] and the European countries[134] retain the exclusion. If the exclusion is to be retained, as aminimum, atransparent and consistent rationale for the exclusion should be offered.

Human Beings and the Biological Processes for their Generation

At present, no further specific exclusions to patentability exist in New Zealand. It appears that it is currently envisaged that the patenting of human beings will fall under the morality exclusion in s 17(1).[135] It is likely that inventors will also find it difficult to overcome the patentable subject matter and novelty requirements with regards to human beings and human related matter. However, 'to put the issue beyond doubt' the Royal Commission on Genetic Modification recommended that the Act be amended by adding a specific exclusion of the 'patentability of human beings and the biological processes for their generation.'[136] The exclusion is based on Australian patent law; the same exclusion is contained in s 18(2) of the Australian Patents Act 1990. Cabinet has since agreed that this recommendation be implemented,[137] and the current review of the Patents Act proposes a specific exclusion to the same effect.[138] No definition of either 'human being' or 'biological processes for their generation' is provided. Again, the exclusion is stated to be for ethical reasons.[139]

The Directive also includes a similar exclusion. Article 5.1 provides that ' [t]he human body, at the various stages of its formation and development, and the simple discovery of one of its elements...cannot constitute patentable inventions.' In the United States, the refusal of the Patent Office to patent humans is based on a policy statement which declares human beings not to be patent-eligible subject matter.[140] This ban rests on the constitutional prohibition of owning property rights in humans.[141]

IV. The Patentability of Human Stem Cell Research in New Zealand

As biotechnology progresses, the same human creativity and ingenuity that gave rise to inanimate discoveries has rendered possible significant advances in the field of biomedicine. Thus, 'it is as logical to issue patents for work on the truly novel and beneficial creations derived from the life sciences as it is to issue patents for inventions in the field of computer science or metallurgy.'[142] Patents for biotechnology processes and products are therefore assessed according to the general patent law criteria.

Patentable subject matter

Historically, living biological organisms were not considered patentable subject matter, but instead constituted discoveries of a product of nature.[143] Discoveries were interpreted as falling outside the definition of invention; like laws of nature such as scientific theories, biological organisms did not constitute a manner of new manufacture. Such discoveries merely made available what already existed in nature. However, in Diamond v Chakrabarty,[144] the Supreme Court of the United States held that a genetically modified bacterium was not naturally occurring, but was instead a product of human creation. The organism therefore constituted patentable subject matter.[145] The relevant distinction is thus 'not between living and inanimate things, but between products of nature, whether living or not, and human-made inventions.'[146] In the same year, the Australian Patent Office issued a practice note whereby it would accept as patentable genetically modified microorganisms which resulted from a controllable and predictable non-natural reproductive process.[147] IPONZ issued a similar note in 1991.[148] However, the reasoning which allowed the patenting of microorganisms can also apply to higher life forms. Thus, New Zealand patent 243908 claims amouse expressing the L3T4 protein which facilitates HIV infection,[149] and patent 324076 encompasses all transgenic non-human animals capable of producing certain heterologous antibodies. The distinction between living and non-living organisms can therefore no longer be retained. Chakrabarty represented a triumph for the emerging biotechnology industry, and today the tilt in favour of biotechnology is palpable.[150] Therefore, if a biological organism involves sufficient human intervention and is not found in nature in the altered state, it will constitute patentable subject matter.[151]

The ability to patent certain biological organisms provided a means for researchers to patent specific human DNA sequences,[152] including entire genes. DNA is a chemical substance which carries genetic information and is used in the production of proteins.[153] A gene is defined as a discrete unit of hereditary information consisting of a specific nucleotide sequence in DNA.[154] It is usually taken to mean a region of DNA that encodes for one cellular function. Broadly, one gene encodes one protein.[155] The sequence of nucleotides in the DNA determines the amino acid sequence in a protein, determining the structure and folding of the protein, and hence its function in the cell.

Since the identification of the structure of DNA in 1953,[156] researchers have been able to identify and extract specific gene sequences from the DNA. However, the product of nature prohibition again presented a hurdle. Previously, the inventions which were found to constitute patentable subject matter notwithstanding the product of nature prohibition were new in that they truly had never existed before. This covered genes that had been modified by recombinant DNA techniques. However, unmodified genes are naturally occurring compounds found in all humans. The hurdle was circumvented by distinguishing between biological compounds in their natural state and those that had been technically identified, purified and reproduced in an isolated state. Genes do not naturally exist as purified or isolated biological compounds;' [t]he biologically pure culture... clearly does not exist in, is not found in, and is not a product of 'nature'. It is man-made and can be produced only under carefully controlled laboratory conditions.'[157] Thus, once particular gene sequences have been identified, the genes can be isolated and considered patentable subject matter. Patent protection will extend to the gene even if its structure is identical to that found within the human body.[158] As the gene does not exist in this purified state in the human body, the patent can never extend to the gene within the body.[159] Genes are therefore regarded as eligible for patenting on the same basis as other inventions. Consequently, an isolated and purified human gene can be patentable if it is novel and inventive compared with the prior art. The same reasoning should function to permit the patenting of human stem cell lines.[160]

However, the government has recently expressed concern that patents involving human genetic sequences, even where such patents meet all of the requirements for patentability, may be overly broad. Specifically, while other fields of technology allow the use of alternative inventions to perform the same function as the patented invention, any research or improvement on gene functions necessitates the use of the patented DNA. Accordingly such patents may pose negative implications for the New Zealand economy, and in particular, the public health system.[161] Thus, notwithstanding that the Royal Commission recommended the retention of the status quo with respect to the patenting of genes and life forms, a discussion document is to be prepared relating to issues surrounding the granting of patents on such material.[162] The document will include consideration of:

(a) The moral and cultural issues raised by the grant of patents over genetic material, including concerns of Maori;
(b) The implications for research and innovation in this field and the granting of patents over genetic material; and
(c) The implications for the level and distribution of health costs and access to health care of such patients.[163]

Examination of the issue may lead to specific changes relating to gene patenting within the current review period. However, the concerns identified with respect to the patenting of gene sequences are not so restricted. The problem of excessive breadth arises in almost all biotechnological inventions; a patent covering all purified embryonic stem cell lines similarly does not allow 'inventing around' the invention in orderto identify different methods of extraction, or the use of such cell lines for uses other than those identified in the patent. This essay will argue that the proposed utility requirement, morality and human beings exclusions in the reviewed Patents Act provide sufficient protection against the stated concerns, while the exception for research use, compulsory licensing provisions, and a narrow construction of the description requirement provide adequate protection with respect to biotechnological patents already granted.


The proposed utility requirement which requires a specific, substantial and credible utility to be shown at the examination stage is substantially more stringent than the existing requirement. A specific utility is contrasted to a general utility that is applicable to the broad class of the invention. Therefore, the Guidelines state:

For example, a claim to a polynucleotide whose use is disclosed simply as a 'gene probe' or 'chromosome marker' would not be considered to be specific in the absence of a specific DNA target. Similarly, a general statement of diagnostic utility, such as diagnosing an unspecified disease, would ordinarily be insufficient absent a disclosure of what conditions can be diagnosed.[164]

Substantial utility is a 'utility that defines a "real world" use. Utilities that require or constitute carrying out further research to identify or reasonably confirm a "real world" context of use are not substantial utilities.'[165] Examples of insubstantial utilities given by the USPTO include ' [b]asic research such as studying the properties of the claimed product itself or the mechanisms in which the material is involved... [and a] method of treating an unspecified disease or condition.'[166] A clear use must therefore be demonstrated for the invention. The requirement that the utility be credible may prevent assertions based purely on homology between cell lines. The requirement therefore excludes 'throw-away, insubstantial, [and] non-specific' utilities.[167] At present, the current state of human stem cell research prevents any demonstration of a specific, substantial or credible utility. No new therapy utilising human stem cells has been developed or even begun to be developed. Processes such as cellular differentiation and gene activation are not yet fully understood, and researchers are in the process of determining whether it is possible that human stem cells can be multiplied for use in transplantation, and whether the cells are likely to be damaged in the process. Processes to control and terminate the multiplication process must also be determined, in order to prevent safety risks to potential patients.[168] Consequently, the inventions resulting from human stem cell research are unlikely to have a specific benefit in their initial forms. The only use for stem cells at present is a research use, in order to begin to achieve the results outlined in Part II. To analogise to gene patents, while research uses may be sufficient to satisfy the utility requirement, to claim all human stem cells for a research use is like claiming DNA in general for research use.[169] In order to satisfy the requirement, an inventor must show a specific understanding of the particular cells and how they might be used in a narrow sense. It is therefore likely that the utility requirement will serve to prevent patents for human stem cells per se, and restrict patents to specific cell lines. For example, one inventor may discover a human stem cell line that can fight a particular form of cancer, while another may develop a cell line modified to act as a gene therapy conferring resistance to the HIV virus. Thus, the proposed utility requirement will serve to prevent broad patents for human stem cells at the current state of scientific knowledge. Requiring patent applicants to disclose a definite use for an invention will alleviate some of the financial pressure of early licensing agreements, freeing funds for future research. In addition, the requirement to disclose a viable utility for an invention is unlikely to act as a disincentive to investors, as the patents that eventually issue will become more valuable.[170]

Morality or Ordre Public

The Patents Act does not specifically address any moral or cultural issues relevant to biotechnology patents. In the context of human stem cell research, different ethical considerations apply according to the source of the stem cells. As a general rule, embryonic stem cells are regarded as of greater ethical concern than adult stem cells, while the use of supernumerary embryos is less concerning than using embryos created for research. Many of the ethical objections to patenting the results of human stem cell research relate to the legitimacy of the particular activity in question. Although such concerns may be relevant if it is accepted that the patent system provides an incentive for continuing investment in such activities; it is unlikely that the removal of such an incentive will terminate innovation in such activities. The concerns may therefore be viewed as of limited relevance. In addition, the New Zealand morality provision is limited to an assessment of morality in the context of the use or commercial exploitation of the invention. Thus, it is arguable that objections in principle from individuals who are opposed to patents on life forms generally are entirely excluded from consideration,[171] as well as broader ethical considerations, such as the method from which the invention was derived, including the provision of informed consent in the donation of body materials.[172] On this view, a comprehensive moral assessment is therefore excluded, as morality by its nature extends beyond the practical.[173] However, the English Patent Office has not used this interpretation of the morality exclusion to exclude a full consideration of the moral considerations relating to human stem cell research;[174] nor, it is submitted, should New Zealand adopt such an approach.[175] A common objection raised with respect to biotechnological inventions in general is the objection to the concept of private ownership of genetic material. More emotively, the concern relates to the legitimacy of 'owning life'.[176] Often the objections relate to the sanctity of life, and a fear of 'playing Godas such interference with the natural order might lead to 'unholy' consequences.[177] Maori also question the morality of allowing patents over biological organisms, as they believe that it is immoral to interfere with the integrity of plant and animal species.[178] The granting of such patent rights is also believed to interfere with the rights of Maori under the Treaty of Waitangi.

The Maori Consultative Committee to be established under the reformed Patents Act will provide advice as to whether an invention involving traditional knowledge or indigenous plants and animals is or is likely to be contrary to Maori values, and may go some way towards relieving Maori concerns.[179] However, at present the scope of the Committee is relatively limited. Although it may ultimately be questionable whether inventions involving human stem cells can properly be termed 'life', the discussion paper relating to the patenting of genetic material will include a wider consideration of such issues.[180] An additional ethical concern relates to the issue of commodification, whereby patenting of biological materials might encourage the commercialisation of such materials. In this area, more significant objections are raised concerning stem cells extracted from embryos and foetuses than adult stem cells. The commercialisation of such entities is regarded as morally concerning per se, but is also seen as objectionable as, if a market of buying and selling human embryos was to emerge, it would almost certainly classify such embryos by genetic identity and other measures of utility.[181] However, prohibition of the research by regulation must also be pertinent; if the commercial exploitation of the activity is prohibited in any event, its patenting can never increase the incentive to engage in such research. In New Zealand, the only relevant legislation with respect to adult stem cells is the Health Act 1956, which prescribes the legal principles relating to human blood. The definition of blood includes 'human haematopoietic stem cells ... that may be used therapeutically.' The Act provides that no person may receive financial consideration for their own blood, and that no person may provide such consideration for the taking of blood from any other person.[182] The Human Assisted Reproductive Technology Bill (HART Bill)[183] also prohibits the provision of financial consideration for the supply of any human embryo or gamete.[184] It is also possible that the grant of a patent might reduce rather than encourage the commercialisation of such materials. The grant of a patent reduces the likelihood of such materials being freely available on the market for commercial purposes; for the opponents against commodification, this can not provide an objection, since they oppose commercialisation of body parts and tissues in any event.[185]

Further, the use of embryonic stem cells is regarded as ethically concerning per se, as the extraction of the cells renders the embryo non-viable. The objection is thus essentially the same as the argument against abortion, namely that life begins at conception and hence killing an embryo is equivalent to the killing of any other human being. At the other end of the scale is the view of the embryo as simply a collection of cells with no special moral rights. A middle view accepts the unique status of the embryo as a potential human being, yet argues that the respect due to the embryo increases as it develops and thus may properly be weighed against the potential benefits arising from the proposed research.[186] The opposing views have been categorised as deontological versus utilitarian theories of ethics.[187] Utilitarian arguments maintain that the therapeutic benefit of human embryonic stem cell research outweighs the harm caused by the destruction of embryos. The argument is of greatest strength with respect to supernumerary embryos; it seems difficult to deny that relieving widespread suffering is morally better than destroying embryos at no gain.[188] It would therefore be unethical not to grant patents for such inventions. The deontological position argues that it is wrong to take the life of an embryo, a human being, to extract stem cells, as this treats the embryo as a means to an end rather than as an end in itself.[189] However, the argument requires a metaphysical assumption; the embryo must first be assigned an equal status as a human being. Thus, in the end, it appears unlikely that such arguments will be resolved as they originate from fundamentally opposed presumptions and ethical perspectives.[190] The welfare of the embryo and foetus is already affected in New Zealand within several areas of law. Under the Contraception, Sterilisation and Abortion Act 1977, the termination of a pregnancy and destruction of a foetus is permitted. The 'morning after' pill is prescribed as an emergency contraceptive measure, and genetic screening involving early embryos has been approved in New Zealand.[191] At present there is no regulation specifically regarding human stem cell research. However the HART Bill, expected to be enacted in early 2004, will allow embryonic stem cell research as part of an Act covering all human reproductive technology.[192] Thus, whether the public abhorrence or the unacceptability test of morality is ultimately adopted in New Zealand, it is submitted that, given existing legislation, the considerable potential of human stem cell research will be found to outweigh the ethical objections to the research. Therefore, as in England, it is unlikely that the use of inventions concerning human stem cell research, including embryonic stem cell research, will, on balance, be found to be contrary to ordre public or morality.[193] However, on the basis of Article 6.2(c) of the Directive, which provides that uses of human embryos for industrial or commercial purposes are unpatentable, the English Patent Office has disallowed patents for processes of obtaining stem cells from human embryos. It is unlikely that such an approach will be adopted in New Zealand absent the express provision contained in the Directive. A consistent approach would hold such processes patentable for the same reasons as outlined above in the context of product patents.

The creation of embryos for research, whether by in vitro fertilisation or by cloning methods, may raise additional concerns. Such embryos can be seen more starkly as simply a means to an end, created solely for use as a product source. Yet again, the objections may be balanced against the specific benefits of such creation, that is, the ability to create a source of genetically identical cells for an individual's future treatment. A common argument contends that allowing the use of embryos created by such techniques is likely to be a first step on a 'slippery slope' towards human reproductive cloning.[194] However, as human reproductive cloning is certain to be prohibited under the new legislation, the slippery slope argument is of less force.[195] The Directive provides that processes for cloning human beings will be considered unpatentable under the morality exclusion.[196] It is unclear whether the prohibition relates solely to human reproductive cloning, or extends to therapeutic cloning techniques.[197] However, New Zealand patent 334016 which claims a method of producing isolated embryonic stem cells by a specified cloning technique was not rejected under s 17(1). It is therefore unclear whether such processes, likely to be incorporated in the in vitro creation of human tissues and organs for transplantation, will fall under the morality exclusion to patentability in New Zealand.

Methods of Medical Treatment of Humans

Numerous applications of human stem cell research may result in treatments for a range of diseases, through gene therapy or regenerative medicine. While a product used for the medical treatment of humans may be patented, at present, it is unlikely that the method used to perform the treatment will be patentable in New Zealand. Thus, in a stem cell gene therapy, the particular stem cell line used to carry the genes to the desired site is likely to be patentable, however a method of treating humans comprising the administration of such stem cells will be unpatentable underthe exclusion. Similarly, in the field of regenerative medicine, assuming the fulfilment of the other patentability criteria, stem cells, tissues and organs for use in transplantation will be patentable, while the method of transplanting the material will not. The only possibility of obtaining patent protection in the field of therapeutic applications is likely to be the Swiss claim formulation, whereby the use of a stem cell product in the manufacture of a medicament for the treatment of a specified disease is likely to be patentable. However, if the basis for the exclusion is determined to rest on the fact that the success of such procedures relies not on the method itself but on the particular doctor or surgeon carrying out the procedure,[198] an argument could be mounted whereby the exclusion would not apply in the field of gene therapy or regenerative medicine:

Both gene therapy and therapeutic transplantation tend to become standardised and repetitive procedures and... become mass-used methods. Therapies in the biotechnology field, therefore, may become as economically important as the biotechnological products themselves, and thus have an economic role to perform on the market - rather than... in the offices of individual doctors and surgeons.[199]

However, such an explanation has never been explicitly adopted in New Zealand. Instead, the exclusion appears to rest on economic grounds, particularly relating to the public health system.

Human Beings and the Biological Processes for their Generation

Human stem cell research may lead to the development of end products that either contain or utilise the stem cells themselves. An example is the use of stem cells to develop cell lines used in drug development. The research could also be used to develop in vitro human tissues and organs. Thus, significantly, the research may yield inventions containing subject matter that is clearly human. Certain results may therefore fall under the proposed exclusion for human beings and the biological processes for their generation. However, the specific processes used to produce the inventions are likely to remain eligible for patent protection.

Ethical questions apart, isolated stem cells fall under the same conditions of patentability as genes, cell lines, and other products of natural derivation, for which there is an established tradition under patent law. Patents are commonly granted in New Zealand for human genes and cell lines.[200] Thus, it is unlikely that inventions involving human genes, cell lines and tissue will fall under the human beings exception, if enacted. Indeed, IP Australia grants patents for inventions involving human genes, cell lines and tissue, underthe understanding that such patents are consistent with s 18(2) of the Patents Act 1990.[201] In contrast, inventions claiming human embryos, foetuses and totipotent stem cells will probably be regarded as involving human beings and consequently unpatentable.[202] A minor issue may arise in this context. The conclusion that a totipotent human stem cell is a 'human being' for the purposes of the patent system may lead to difficulties in patenting pluripotent stem cells underthe morality exclusion. If atotipotent stem cell is ahuman being, then an embryo at a later stage of development must surely also be a human being, and the destruction of a human being must be morally abhorrent. For this reason, it may be preferable to base the wording of the exclusion on Article 5.1 of the Directive, which provides that '[t]he human body, at the various stages of its formation and development...cannot constitute [a patentable invention]', thereby avoiding the metaphysical issue concerning the nature of a human being.

However, at present in New Zealand patents have already been issued for inventions involving specific procedures for isolating, purifying and differentiating human stem cells which would be unlikely to meet the proposed examination standards under the reviewed Act. In particular, patent number 334016, owned by the University of Massachusetts and filed in 1997, claims a method of producing isolated embryonic stem cells, including human embryonic stem cells, by cross species SCNT.[203] It also claims embryonic stem cells obtained by the method including genetically modified cells, differentiated cells produced by the stem cells, and the use of such differentiated cells in the manufacture of a medicament for cell transplantation therapy. The patent is thus relatively broad, covering all pluripotent stem cells obtained by SCNT, and downstream products. However, no New Zealand patents appear to cover pluripotent human stem cells obtained by other methods. Patents have also been granted for inventions involving multipotent human stem cells. Patents 336185 and 505997 claim specific methods of genetically modifying haematopoietic stem cells and the stem cells so obtained.

Narrowing the Scope of Patents on Human Stem Cell Research

The justifications for strong patent protection outlined in Part III have led to a tradition of broad claiming within the industry, so that '[t]he recent expansion of intellectual property has come to be more an end in itself than a means to the end of stimulating desirable innovation.'[204] The strategy appears to involve drafting claims as broadly as possible, and then 'see[ing] what sticks at the patent office.'[205] Nowhere is this trend more apparent than in the area of biotechnology patents. An example is the patent on embryonic stem cells in the United States, owned by the Wisconsin Alumni Research Foundation (WARF), which covers all embryonic stem cells and downstream products, regardless of how the stem cells were derived.[206] Such breadth in patent claiming is especially injurious in relation to biotechnology patents as biotechnology deals with living matter, capable of self-reproduction. It also leads to extensive and costly licensing regimes, which may actually impede future research and development.[207] The ultimate effect is a virtual bottleneck of patent rights; if the patent owner refuses to use or licence the invention, no further development of technologies based on the invention can occur. In determining the scope of patent protection, then, it is necessary to achieve a balance: both too little and too much protection may deter innovation.[208] This essay will not attempt to provide a definitive answer to the question of scope in biotechnological patents, but will merely outline possible routes by which the problems associated with excessively broad patents may be overcome.


Although the University of Massachusetts patent in New Zealand is significantly narrower than the WARF patent in the United States, it is submitted that both patents are overly broad, and should be narrowed by the courts if challenged.[209] WARF's inventive step was not the discovery of the human embryonic stem cell, but a method for maintaining primate embryonic stem cells in culture in such a way that they retain the ability to differentiate into different cell types, and the production of some unique embryonic stem cell lines.[210] However, the WARF patent covers all embryonic stem cells and all methods of obtaining such cells. The use of SCNT as a method of obtaining genetically identical embryonic stem cells constituted the inventive step of the Massachusetts patent. However the patent also claims all differentiated cells produced from such cells, although as yet there is little scientific knowledge surrounding such mechanisms of differentiation.[211] A better solution would be to bestow on such upstream inventions only a narrow property right, or no property right at all. The claims should be narrowly construed, not only because they are upstream discoveries, but also because broad patents are unlikely to accurately represent the inventive step disclosed.

However, while the proposed utility requirement will provide a means by which patents on basic research tools may be denied, allowing patents on research tools with a specific purpose, utility is also tied to the description requirement. The invention must produce the result promised, that is, it must 'do what [the inventor] says it will do.'[212] In the United States the description requirement is divided into two discrete doctrines.[213] The enablement doctrine requires that the specification fully enable all of the claims, that is, it should provide enough information for a person skilled in the art to make and use the claimed invention 'without undue experimentation'.[214] In contrast, the written description doctrine requires that the applicant also 'convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the invention'.[215] The enablement requirement has recently been used by courts in the United States to narrow overly broad claims to a genus in biotechnological inventions. To adequately describe a genus, the specification must describe 'a representative number of species [that is] representative of the entire genus.'[216] In biotechnology, the unpredictable nature of the science means that often little is known of the entire genus, the doctrine thus warrants narrowed claims to genes, proteins and host cells. For example, in Enzo Biochem, Inc v Calgene, Inc[217] the Court found that claims to genetic antisense technology in the ' entire universe of cells' were not sufficiently described as the disclosure only discussed E Coli cells.[218] However, the courts have also shown a reluctance to use the requirement to narrow patents in 'dynamic industries'.[219] Thus, a patent in Amgen, Inc v Hoechst Marion Rousel, Inc[220] which claimed exogenous and endogenous gene sequences for a compound, while only discussing exogenous sequences in the disclosure, was upheld. The Budapest Treaty[221] provides that the description requirement for a microorganism must be supplemented by the deposit of the microorganism in an internationally recognised depository authority. Several such depositories also accept the deposit of human cell lines under the Treaty.[222] Indeed, 'if describing a single cell line has been found impossible, then how can description of the entire range of human embryonic stem cells.. be possible?'[223] It is contended that the courts and patent offices should use the description doctrine to narrow overly broad claims, not only in the area of human stem cell research, but throughout the area of biotechnology. The derivation and practical application of human stem cells are both dynamic and unpredictable areas of research. Just as an example of antisense technology in E Coli cells did not sufficiently enable claims to such technology in all cells, a single method of obtaining human stem cells cannot sustain a claim to all human stem cells and future application of such cells.

Compulsory Licensing and the Research Exemption

It has been shown that patents may be granted on 'research tools', provided the tools pass the tests required for patentability. There is little doubt that these research tools are of economic value to the patent holder; however, there is also little doubt that 'the value to society is greatest when such research tools are widely available to scientists.'[224] Failures in licensing are especially dangerous when the patent protection in question covers a pioneering or upstream invention. Thus, an additional route by which the effects of excessively broad patents may be lessened is through the compulsory licensing provisions in the Patents Act. A compulsory licence is a licensing agreement directed by the Court in respect of a granted patent. The provisions exist to prevent a patent owner from using the patent system in a manner which is contrary to the purpose of the system. Section 46 of the Act provides that the Court may grant a compulsory licence of a patented invention on the application of an interested person, at any time after three years from the date of sealing of the patent or four years from the date of the patent.[225] The basis for granting a compulsory licence is that a market for the patented invention is not being supplied, or is not being supplied on reasonable terms in New Zealand,[226] and a licence will not be granted unless the applicant has taken all reasonable steps to obtain a licence on reasonable terms from the patent owner.[227] The existence of compulsory licensing regimes is likely to act as an incentive to voluntary licensing at reasonable terms.[228] Further, compulsory licensing in more than 100 antitrust settlements showed negligible adverse effects on the target companies' research and development investments.[229] Indeed, 'there is a lesson here for today's entrepreneur. Possessing a right does not mean that it is a good idea to enforce it always, and to the hilt. Discretion may be nine parts of possession.'[230]

However, difficulties are likely to arise in determining when a market is not being supplied 'on reasonable terms'. The provisions, as amended in 1994, have yet to be used in New Zealand.[231] Kamborian's Patent[232] lists three factors to be considered when determining whether there is a reasonable supply of the invention to the market. First, whether there is a demand for the patented invention, and secondly, if there is, what that demand might reasonably be expected to be. Thirdly, the quantum of shortfall in the supply of that expected demand should be considered. The court must then assess whether the shortfall between supply and demand is sufficient for the grant of a compulsory licence. The test is somewhat circular, however such difficulties are unlikely to be insurmountable; similar issues are resolved on a daily basis by the courts. The court may also be able to refuse to issue a licence where the applicant is likely to be unable to work the licence effectively.[233]

The terms of the compulsory licence to be granted are also unclear beyond the stipulation that the licensee must pay remuneration to the patent owner, and licences granted are non-exclusive.[234] The determination of a reasonable royalty rate is likely to be particularly difficult given that marketable products from the research are probably years away. A reasonable rate could take into account the value of the invention to the public, whereby greater remuneration would result from a 'significant and substantial advance in medical science'.[235] An additional term may involve a research exemption, where use of a patented invention in research would be acceptable, but once the result of that use is developed into a product, the user would need to negotiate with the patent holder for rights to commercialise .[236] However, the original patent holder still remains in a dominant bargaining position. Arguably researchers are unlikely to begin research where there is a chance they might be blocked from commercial development of their results at the last hurdle.[237]

At present in New Zealand there is a judicially defined 'exclusion from infringement for the benefit of those practising the invention for the purpose of bona fide research.'[238] Thus, information disclosed in a patent specification can be the basis of experimentation with a view of developing improvements to the invention or other bona fide research without the authorisation of the patent owner.[239] However, the exemption will not apply where there has been 'some deriving of advantage' in a commercial sense.[240] The research exemption may be of particular importance to the patenting of the results of human stem cell research, especially with respect to patents already granted under the more lenient requirements, although discriminating between 'bona fide' academic research and research with commercial potential is likely to be difficult, or impossible. Many basic biotechnological discoveries have direct commercial application. Under the new proposals, while the stricter utility requirement is likely to reduce the number of patents granted on basic research, specific research tools will still be patentable. The exemption is unlikely to apply in such a situation, as research is then the commercial use of the invention; there has been some 'deriving of advantage' by the research use of the invention. Indeed, university use of inventions may never fall within the exemption as university research activities 'unmistakably further the institution's legitimate business objectives, including educating and enlightening students.'[241] The distinction between commercial and non-commercial research therefore is unable to be applied in a practical sense.

The distinction is also problematic from a theoretical standpoint. Society benefits from innovative research whether or not the research is driven by a profit motive. In addition, a recent amendment to the Patents Act creates a statutory exemption from patent infringement where a person makes, uses, exercises or vends an invention:

... solely for uses reasonably related to the development and submission of information required under New Zealand law or the law of any other country that regulates the manufacture, construction, use or sale of any product.[242]

The exemption thus decreases the time it takes for generic products to enter the market following the expiration of a patent. It also enlarges the research exemption; such actions had previously been held to fall outside the exemption as they enabled the derivation of a commercial advantage.[243] The amendment leaves the scope of the research exemption unclear. One possible interpretation of the exemption may hold that use of a patented invention for 'technological advancement' will not infringe the rights of the patent holder.[244] Such an interpretation arguably best furthers the goal of the patent system to promote innovation and technological development. Better access to research will increase innovation and reduce inefficient licensing agreements and 'royalty stacking'.[245] However, it will also reduce the monopoly afforded to inventors, and thus reduce the inventive to innovate. Ultimately, the breadth of the exemption is a policy decision. The issue could well receive consideration under the current review of the Patents Act.

V. Conclusion

Stem cell research offers many potential benefits to science and society as a whole. At present, scientific knowledge is the limiting factor; much basic research is still required, and clinical and therapeutic applications of stem cell research are unlikely to be immediately forthcoming. However, the best science and invention may be revolutionary and often controversial, and human stem cell research is no exception. Moral and ethical concerns have dominated the human stem cell debate. It is contended that the proposed amendments to the Patents Act will provide a suitable framework for patenting the results of human stem cell research, avoiding overly broad patents and addressing the most pressing ethical concerns. IPONZ and the courts must make sure that the traditional bars to patentability are suitably enforced. Isolated biological materials with an identified use other than a general research or therapeutic use will be patentable. The extraction of stem cells from human embryos or foetuses is unlikely to render the cells unpatentable under the morality exclusion, although it is arguable that a different situation may apply where cloning techniques are also employed. Human embryos, foetuses and totipotent stem cells will fall within the exclusion for human beings and the biological processes for their generation, however, the methods of obtaining the products may still be patentable. Once the basic research has been completed and therapeutic treatments of humans become possible, the products of the research (such as stem cell lines, and differentiated tissues and organs) used in the therapy will be patentable, although the method of administering the product will not. However, overly broad patent protection may also deter innovation, especially in relation to upstream inventions in relatively new fields of science. The courts should temper the effects of granted patents through the responsible governance of patent rights. Claims should be narrowly construed by the courts through use of the description requirement, and the compulsory licensing provisions employed to overcome failures in licensing the inventions. The scope of the research exemption should be clarified to ensure that the inventions are used in a way that benefits society as a whole. The patent system can then achieve its goal of providing incentives to all parties who may be involved in the development of an invention.


Antibody A protein that is produced in response to an antigen, to bind with and neutralise the antigen.

Antigen A foreign substance that causes an immune system response.

Antisense technology The employment of small molecules of DNA (the antisense strand) to bind to specific RNA sequences, preventing the production of proteins.

Blastomere separation The process whereby the blastomere (an early embryo) is artificially coaxed into separation and division.

Cell line A cell line is comprised of a number of homogeneous cells, containing a similar hereditary lineage. It is created by removing cells from an organism, and isolating and culturing the cells on a medium.

Chromosome The DNA-containing structure found in the cell nucleus.

Clone A population of cells all descended from a single cell; the cells are genetically identical to the originating cell.

Blastocyst A preimplantation embryo of about 150 cells. The blastocyst consists of a sphere made up of an outer layer of cells (the trophectoderm), a fluid-filled cavity (the blastocoel), and a cluster of cells on the interior (the inner cell mass).

Differentiation The process whereby an unspecialised stem cell acquires the features of a specialised cell such as a heart, liver or muscle cell

DNA Deoxyribonucleic acid, a chemical found primarily in the nucleus of cells. DNA encodes all the genetic information for an organism.

Ectoderm The upper, outermost layer of a group of cells derived from the inner cell mass of the blastocyst; the ectoderm gives rise to skin nerves and brain.

Embryo In humans, the developing organism from the time of fertilisation until the end of the eighth week of gestation, when it becomes known as a foetus.

Endoderm The lower later of a group of cells derived from the inner cell mass of the blastocyst; the endoderm gives rise to the lungs and digestive organs.

Foetus A developing human from usually two months after conception to birth.

Gene A functional unit of heredity that is a segment of DNA located on a specific site on a chromosome. A gene directs the formation of a particular protein.

Gene therapy The process of introducing new genes into the DNA of a person's cells to correct a genetic disease or defect.

Gonadal ridge The aggregation of cells in an embryo or foetus that becomes the testis or ovary.

Heterologous Derived from a separate genetic source or species.

Homologous Derived from a common ancestral organism.

In vitro In vitro literally means 'in glass'. It refers to techniques carried on inside a laboratory and is contrasted to in vivo techniques, which are carried on inside the body.

Karyotype The complete set of chromosomes of a cell or organism.

Mesoderm The middle layer of a group of cells derived from the inner cell mass of the blastocyst; the mesoderm gives rise to bone, muscle, and connective tissue.

Multipotent stem cellAn undifferentiated cell found in differentiated tissue that can renew itself and (with certain limitations) differentiate to yield all the specialised cell types of the tissue from which it originated.

Parthenogenesis Reproduction in which offspring are produced by an unfertilised female.

Pluripotent stem cell An undifferentiated cell that has the potential to become a wide variety of specialised cell types. A pluripotent stem cell does not possess the ability to develop into an entire organism.

Protein A biological molecule consisting of amino acids joined together to form a polymer. Proteins are required for the structure, function, and regulation of cells in an organism.

Regenerative medicine A treatment in which stem cells are induced to differentiate into the specific cell type required to repair damaged or depleted adult cell populations or tissue.

Reproductive cloning The process in which a cloned embryo is implanted into a woman's uterus with the intention of forming a human baby.

Somatic cell nuclear transfer (SCNT) The process in which a nucleus from a somatic cell is transferred into an egg cell that has had its nucleus removed.

Stem cell A cell that has the ability to divide for infinite periods in culture and to give rise to specialised cells.

Therapeutic cloning The use of a cloned embryo for research and therapeutic purposes.

Totipotent stem cell An undifferentiated cell that has the ability to develop into an entire organism, including extra-embryonic tissue.

Trophoblast The extra-embryonic tissue responsible for implantation, developing into the placenta, and controlling the exchange of oxygen and essential compounds between mother and embryo.

[*] The author is a solicitor practising in Auckland. This paper was awarded the Canterbury Law Review Prize for the best undergraduate Honours paper completed in 2003.

[1] Hon Judith Tizard, Review of the Patents Act 1953 Stage 3 Part 2: Regulatory Impact Statement (2003), 1.

[2] Neil A Campbell, Jane B Reece, Lawrence G Mitchell, Biology (5th ed, 1999), 589.

[3] J Thompson, 'Primate Embryonic Stem Cells' US Patent 6,200,806, column 1.

[4] The human reproductive cells, sperm and egg cells, are known as gametes. Gametes contain only one set of the 23 human chromosomes. A zygote is the cell possessing 23 pairs of chromosomes that is created when the egg cell is fertilised.

[5] Independent Biotechnology Advisory Council, Cloning and Stem Cell Research (2001), 9.

[6] Campbell, Reece, Mitchell, above n2, 928.

[7] Pluripotent stem cells are often termed embryonic stem cells as the method of extraction from the inner cell mass of the blastocyst provides the most common method of extraction of the cells.

[8] Thompson, above n3, column 3.

[9] Extra-embryonic tissue includes the placenta and the trophoblast, both essential to foetal development. This tissue is derived from the outer layer of cells in the blastocyst.

[10] J Gearhart, 'Human Embryonic Pluripotent Germ Cells' US Patent 6,090,622.

[11] Thompson, above n3; Gearhart, above n10.

[12] Stacy Kincaid, 'Oh, The Places You'll Go: The Implications of Current Patent Law on Embryonic Stem Cell Research' (2003) 30 Pepperdine Law Review 553, 564. However, the present scope of the patents covers all method of deriving such stem cells, therefore currently, while others might develop different methods of preparing pluripotent stem cells, they will still need to licence the use of the stem cells so derived.

[13] House of Lords, Select Committee on Stem Cell Research Report, [2, 2] British Parliamentary website: <> This ability (known as homeostasis) has long been recognised in skin, liver, heart, and lung tissue, however only recently has it been discovered that this ability might extent to the central nervous system, which consists of the brain and spinal cord. Fred H Gage, 'Brain, repair yourself' (2003) 289 Scientific American 46, 46.

[14] House of Lords, above n 13.

[15] Multipotent stem cells are often described as adult stem cells; again, as adult tissue is the primary source of such cells. Mammals appear to contain some 20 major types of multipotent stem cells, including the haematopoietic stem cell that resides in bone marrow and the mesenchymal-like stem cell found within adipose cells. Jonathon Slack, 'Skinny Dipping for Stem Cells' (2001) 3 Nature Cell Biology 205; Patricia A Zuk et al, 'Human Adipose Tissue Is a Source of Multipotent Stem Cells' (2002) 13 Molecular Cell Biology 4279.

[16] David J Anderson,'The Alchemy of Stem Cell Research', cited in Alexander Morgan Capron, 'Stem Cells: Ethics, Law and Politics' (2001) 20 Biotechnology Law Report 678, 678-9.

[17] Such a potential may be inherent in some adult stem cells, or possible via dedifferentiation, that is, the reversal of the differentiation process of adult cells. Slack, above n 15.

[18] In normal cells, cellular reproduction decreases the "fuse" of chromosomal telomeres to a certain minimum point. Stem cells, however, produce an enzyme called telomerase, which replaces the telomeres every time the cell replicates. In pluripotent stem cells, this process appears to be infinite.

[19] Senator Bill Frist, 'The Promise and Peril of Embryonic Stem Cell Research: A Call for Vigilant Oversight' (2001) 2 Yale Journal of Health Policy and Ethics 167, 168.

[20] However, a notable exception is the United States, where President Bush issued a directive in August 2001 permitting federal funding of embryonic stem cell research only on cells derived from stem cell lines established before that time. The Whitehouse website <>

[21] Capron, above n 16, 685.

[22] Another alternative involves in vitro biochemical assays. Capron, ibid.

[23] Commission of the European Communities, Report on Human Embryonic Stem Cell Research (2003), 7.

[24] National Institutes of Health, Stem Cells: A Primer (2000), 5. National Institute of Health <>

[25] European Group on Ethics, Study on the patenting of inventions related to human stem cell research (2001), 14.

[26] United States Department of Health and Human Services, Human Pluripotent Stem Cell Research Guidelines (2001)1. United States Department of Health and Human Services <>

[27] Damon J Whitaker, 'The Patentability of Embryonic Stem Cell Research Results' (2002) 13 University of Florida Journal of Law and Public Policy 361, 366.

[28] European Group on Ethics, above n 25, 14.

[29] Capron, above n 16, 679.

[30] National Institutes of Health, above n 24, 5; Vijayakumar K Ramiya et al, 'Reversal of insulin-dependent diabetes using islets generated in vitro from pancreatic stem cells' (2000) 6 Nature Medicine 278.

[31] Such an understanding could also enable researchers to stimulate self-repair using an individual's own stem cells. Gage, above n 13, 47.

[32] European Group on Ethics, above n 25, 15.

[33] The obvious solution would be to use stem cells obtained from the recipient. Although this possibility has been demonstrated using haematopoietic stem cells isolated from bone marrow, difficulties associated with the use of adult stem cells mean genetically identical pluripotent stem cells are a preferable option. An additional possibility might be to maintain libraries or banks of stem cells with different genetic identities. The cell line to be used for transplantation could then be selected based on recipient compatibility, where the HLA antigens of the donor and recipient are matched as closely as possible. Jason R Braswell, 'Federal Funding of Human Embryo Stem Cell Research: Advocating a Broader Approach' (2003) 78 Chicago-Kent Law Review 423, 440-1.

[34] The technique is also referred to as Cell Nuclear Replacement (CNR). A somatic cell is a cell from any part of the body except for the ovary or testis. Campbell, Reece, Mitchell, above n 6, 208.

[35] Independent Biotechnology Advisory Council, Cloning and Stem Cell Research (2001) 7. Nuclear DNA comprises the majority of the DNA in a cell. However, a limited amount of genetic information is stored in the mitochondria. This mitochondrial DNA would not be identical to that of the recipient; however, it is assumed that the genetic information so contained is so minimal as to be presumed inconsequential in the process.

[36] The embryos will therefore possess the same DNA as each other, but not as either parent. This process must occur before the fourteenth day of development, when the 'primitive streak' appears and the embryo can no longer split and form more than one identical organism. This provides the basis for the ban on keeping embryos beyond a fourteen day period in England and New Zealand.

[37] Nicholas Wade, 'New Stem Cell Source Called Possible' New York Times (1 Feb 2002) A3. England has recently granted a licence to Roslin Institute, Scotland (the institute which developed Dolly the sheep) to create human embryos for stem cell research using parthenogenesis. Brian Vastag, 'UK licences human embryo creation' (2003) 290 Journal American Medical Association 449, 449.

[38] House of Lords, above n 13 [5.8, 5.5].

[39] New Zealand Parliamentary Library Bills Digest, Human Assisted Reproductive Technology Bill 1996 Supplementary Order Paper 2003 No 80, 2-5; Warren Hoge, 'UN Delays Debate on Cloning of Human Beings for One Year' New York Times (10 December 2003).

[40] Ministry of Economic Development, Review of the Patents Act: Boundaries to Patentability (2002) 29.

[41] Non-viable embryos are embryos that are unsuitable for freezing and therefore implantation.

[42] Ministry of Justice, HART SOP Questions & Answers, [22]. Ministry of Justice <> Dr Bronwen Connor, Professor Richard Fault, Stem Cells and Neurodegenerative Disease (2002) <>

[43] House of Lords, above n 13, [3.8].

[44] Patents Act 1953, s 30(3). The time period begins from the date of filing of the complete specification. Section 30(4) of the Patents Act 1953 provides that renewal fees are payable at the end of the fourth, seventh, tenth, and thirteenth year. If these are not paid, the patent will lapse earlier.

[45] Intellectual Property Office of New Zealand, Patent Protection Guide (2001) 1.

[46] Ibid, 13-19.

[47] European Group on Ethics, see above n 25, 17.

[48] Professor Vaver impliedly criticises the breadth of such patents by providing an example. 'So, a new process for making table salt would give its local patent holder the power to stop the import and distribution of salt made offshore by the process, even though the salt itself, as a well-known product, was plainly unpatentable and indistinguishable from salt made by any other process.' Professor David Vaver, 'Intellectual Property: The State of the Art'(2001) 32 Victoria University of Wellington Law Review 1, 5.

[49] Sansom v Brown and Andrews (Contracts) Ltd (1999) 9 TCLR 177 (HC), citing Steers v Rogers [1893] UKLawRpAC 13; [1893] AC 232 (HL) per Lord Hershell.

[50] Vaver, above n 48, 15.

[51] An assumption that, according to Professor Vaver, is rarely supported by empirical evidence.

[52] Ministry of Economic Development, above n 40, 5.

[53] Patents Act 1953, s 10.

[54] Where '[t]he quid to the patentee is the monopoly; the quo is that he presents to the public the knowledge which they have not got' Pope Appliance v Spanish River (1929) 46 RPC 23, 55 (HL) per Viscount Dunedin.

[55] Pharmaceutical Management Agency Ltd v Commissioner of Patents[2000] 2 NZLR 529, 532 (CA) per Gault J.

[56] Ministry of Economic Development, above n 40, 5-6.

[57] GB Petersen, 'The cost of knowledge' (2001) 58 New Zealand Science Review 7, 8.

[58] SJR Bosytn, The Prodigal Son: The Relationship between Patent Law and Health Care' [2003] 11 Medical Law Review 67, 116-7. 59 European Patent Office, 'European Patent Office Information Note' in European Group on Ethics, Opinion on ethical aspects of patenting inventions involving human stem cells (2002), 79.

[60] Patents Act 1953, ss 13, 14.

[61] Patents Act 1953, s 2(1). These terms, and the comparative breadth of the current New Zealand patent system, will be further addressed below.

[62] R v Patents Appeal Tribunal, ex parte Swift and Co [1962] RPC 37 (CA); Microcell Ltd and Others' Application [1977] FSR 163 (HCA).

[63] Hon Judith Tizard, Media Statement: Amendments proposed for the Patents Act and Plant Variety Rights Act, 6 August 2003. Ministry of Economic Development website <> The Patents Act is currently undergoing a 3 stage review process. Stages 1 and 2 have been completed; Stage 3 is currently underway.

[64] Hon Judith Tizard and Hon Annette King, Implications of the Granting of Patents over Genetic Material (2003), 1.

[65] Both also provide that parties must grant the same level of intellectual property protection that is available to their own nationals to nationals of other parties. The Paris Convention additionally enables a person who has filed a patent application in one member country to claim priority from that application in any subsequent application for the same invention in another country, within 12 months of the original filing.

[66] Andrew Brown, 'Intellectual and Industrial Property' (2000) New Zealand Law Review 461, 462.

[67] Patents Act 1953, s 2(1).

[68] National Research Development Corporation v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252, 271 (HCA).

[69] Ibid, 269, acceptedfor New Zealand inPharmaceuticalManagement Agency Ltdv Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 536. The courts thus rejected the 'vendible product' test laid down in Re GECs Application for a Patent (1942) 60 RPC 1 (Patents Appeal Tribunal).

[70] Novelty may be considered at the examination stage, opposition proceedings and at revocation. Patents Act 1953, ss 13, 14, 21(1)(b) and 41(1)(e).

[71] Susy Frankel and Geoff McLay, Intellectual Property in New Zealand (2002), 345.

[72] Ministry of Economic Development, above n 40, 13.

[73] Smale v North Sails Ltd [1991] 3 NZLR 19 (HC).

[74] Christopher D Hazuka, 'Supporting the Work of Lesser Geniuses: An Argument for Removing Obstructions to Human Embryonic Stem Cell Research' (2002) 57 University of Miami Law Review 157, 207.

[75] Daily v Lightband [1903] NZGazLawRp 145; (1903) 6 GLR 135.

[76] Re Mond Nickel Co Ltd's Application [1956] RPC 189, 194 (Patents Appeal Tribunal) per Lloyd- Jacob J, applied in New Zealand in Re Application by Rohm and Haas (New Zealand Patent Office, IP No 235090, 23 April 1996).

[77] Patents Act 1953, s 41(1)(g).

[78] 'If an invention does what it is intended by the patentee to do, and the end attained is itself useful, the invention is a useful invention.' Fawcett v Hoffman (1896) 13 RPC 398 (Eng CA).

[79] Tizard and King, see above n 64, 2.

[80] Tizard, see above n 1, 6.

[81] The requirements are reproduced from the Utility Guidelines (Guidelines) promulgated by the United States Patent and Trademark Office (USPTO) in 2001, and it appears that a similar narrow interpretation is being given to the industrial applicability requirement in Article 57 of the European Patent Convention. USPTO, 'Guidelines for Examination of Applications for Compliance With the Utility Requirement' (2001) 66 Fed Reg 1092; Re ICOS Corporation (2002) European Patent EPO 630 405.

[82] Patents Act 1953, ss 21(1)(e), 41(1)(f).

[83] CAB Min (03) 11/5; Hon Judith Tizard, Cabinet Paper: Review of the Patents Act 1953 Stage 3: Part 1 (2003) 4.

[84] Harwood v Great Northern Railway Company [1865] EngR 708; [1865] 11 HLC 654, 682 (HL) per Lord Westbury.

[85] Ancare New Zealand Ltd v Cyanamid ofNZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, [43] (CA) per Gault J.

[86] Tizard, above n 83, 5, 8.

[87] Tizard, above n 1, 4. The exclusion is almost identical to that in Article 27.2 of the TRIPS agreement, although Article 27.2 further states, "provided that such exclusion is not made merely because the exploitation is prohibited".

[88] Tizard and King, above n 64, 4.

[89] Arguably such breadth is unnecessary as both the avoidance of harm to human, animal or plant life and the avoidance of harm to the environment can be encompassed within the morality exclusion. Most belief systems are likely to preclude damage to life and, perhaps to a lesser extent, to the environment.

[90] Tizard, above n 1, 7.

[91] Ibid, 4.

[92] Pfizer, Inc v Commissioner of Patents ( HC Wellington, AP257/2000, 30 August 2002, Ellis J) rejected claims for methods of medical treatment of humans under the section.

[93] The Australian Patent Office Manual asserts that it is inappropriate for the patent office to deal with matters of ethics and social policy, and the USPTO famously avoided confronting such questions in respect of applications for human-animal chimeras. Matthew Rimmer, 'The Attack of the Clones: Patent Law and Stem Cell Research' (2003) 10 Journal of Law and Medicine 488, 500. See also the statement of Finklestein J in Bristol- Myers Squibb v FH Faulding & Co Ltd [2000] FCA 316; (2000) 46 IPR 553, 586 (FCA): 'judges should not be called upon to resolve moral questions and, speaking generally, legal principles are not to be ascertained by reference to standards of ethics or morality.'

[94] See Westminster Institute for Ethics and Human Values at the McGill Centre for Medicine and Law, Ethical Issues Associated with the Patenting of Higher Life Forms (1994) <http://www. collection. 0/3 01/ic/ippd-dppi/ethical_issues_patenting-e/schrecef.pdf>

[95] Greenpeace v Plant Genetic Systems NV (PGS) (1995) OJ EPO 545 (EPO), [18.3]. 96 Patents Act 1953, s 17(1)(b).

[97] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 535 (CA) per Gault J.

[98] 'The true position in my view is that the combined definition in reality not only defines an invention but also limits the patentability of one. These limits are where the invention is contrary to law, mischevious to the state by raising prices or commodities at home or hurt trade, or generally inconvenient.' Pfizer, Inc v Commissioner of Patents (HC Wellington, AP257/2000, 30 August 2002, Ellis J), 10.

[99] (1817) 15 F Cas 1018, 1019 (D Mass) per Story J.

[100] Cyril R Vidergar, 'Biomedical Patenting: Permitted, But Permissible?' (2002) 19 Santa Clara Computer & High Tech Law Journal 253, 262.

[101] Directive 98/44/EC.

[102] Greenpeace v Plant Genetic Systems NV (PGS) (1995) OJ EPO 545, [18].

[103] Harvard/Oncomouse [1990] EPOR 501 (EPO). The concept includes the protection of the environment.

[104] Donna M Glitter, 'Led Astray by the Moral Compass: Incorporating Morality into European Union Biotechnology Patent Law' (2001) 19 Berkeley Journal of International Law 1; Amanda Warren, 'A Mouse in Sheep's Clothing: The Challenge to the Patent Morality Criterion Posed by Dolly' (1998) 20 European Intellectual Property Review 445.

[105] Re Lubrizol Genetics, Inc (Lubrizol II) [1992] OJ EPO 71 (EPO); Hormone Relaxin (1995) OJ EPO 388 (EPO).

[106] 'This provision is likely to be invoked only in rare and extreme cases. A fair test to apply is to consider whether it is probable that the public in general would regard the invention as so abhorrent that the grant of patent rights would be inconceivable.' European Patent Office <>

[107] Harvard/Oncomouse (1992) OJ EPO 588. The Oncomouse case may be contrasted with the case of Upjohn's hairless mouse, which constituted a genetically engineered hairless mouse bred for the primary purpose of testing hair restorative products. The EPO refused to grant the patent as the benefit to humans did not outweigh the ethical issues of the risk of pain and suffering to the mouse.

[108] Greenpeace v Plant Genetic Systems NV (PGS) (1995) OJ EPO 545.

[109] [1961] RPC 21. This explanation was employed in New Zealand in Maeder v Ronda Ladies Hairdressing Salon [1942] NZGazLawRp 108; [1943] NZLR 122 (CA).

[110] [1983] NZLR 385 (CA).

[111] Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385, 388.

[112] Ibid, 404.

[113] Ibid, 391.

[114] Commissioner of Patents,‘Patent Office Practice Note' October 1998, Patent Office Journal 1402, 249. The exception had been judicially narrowed prior to Wellcome: Swift & Cov Commissioner of Patents [1960] NZLR 775 (SC) (methods of medical treatment of animals); Joos v Commissioner of Patents [1972] HCA 38; [1973] RPC 59 (method of strengthening human hair and nails); Schering AGs Application [1971] RPC 337 (Ch Div) (method of contraception).

[115] [1999] NZCA 330; [2000] 2 NZLR 529, 538 (CA).

[116] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 538 per Gault J.

[117] Nino Pires de Carvalho, 'The Budapest Treaty and its Applicability to Human Stem Cell Lines' cited in European Group on Ethics, Opinion, above n 59, 101, 105. The same explanation is offered as to why patents are not granted for recipes, as both depend more on the independent skill of the practitioners than on the particular method in question. Other explanations have relied on the 'generally inconvenient' exclusion in s 6 of the Statute of Monopolies (Eli Lilly & Company's Application [1975] RPC 438 (UKPO)), long established practice, and the absence of compulsory licensingprovisions for medical treatment methods. Wellcome Foundation Ltd v Commissioner of Patents [1979] 2 NZLR 591, 617 (SC).

[118] Pfizer Inc v Commissioner of Patents (HC Wellington, AP257/2000, 30 August 2002, Ellis J).

[119] Ibid 12.

[120] The application was granted on 17 February 2003. New Zealand Law Society, Intellectual Property 2003 (2003), 84.

[121] Tizard, above n 83, 8. Again, the exclusion is based on Article 27 of the TRIPS agreement. Article 27.3(a) allows the exclusion from patentability of diagnostic, therapeutic and surgical methods of treatment of humans or animals.

[122] Hon Judith Tizard, above n 63.

[123] This explanation is supported by the submissions to the review received on the topic of medical treatment. Only one of six submissions (Pharmac) was against methods of medical treatment being patentable. Ministry of Economic Development, Summary of Submissions Received on the Patents Act Review Discussion Paper (2002), 9.

[124] Wellcome Foundation Ltd v Commissioner of Patents [1983] NZLR 385, 391 per Cooke J.

[125] Ministry of Economic Development, above n 40, 6.

[126] Possible support for this reasoning could be gleaned from dicta in Pharmac: That obligation [to make available patents that meet the patentability criteria] is not to be set aside on grounds based on circumstances of convenience such as the comparatively low level of medical research undertaken in this country or the particular method by which medicines are funded.' Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 547 per Gault J.

[127] Commissioner of Patents, 'Patent Office Practice Note', 7 July 1997; Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529.

[128] Ibid 547.

[129] Ibid 538.

[130] Ibid 547.

[131] 35 USC 287(c) (1)-(4).

[132] Anaesthetic Supplies Pty Ltd v Rescare Ltd [1994] FCA 1065; (1994) 122 ALR 141 (FCA).

[133] Upjohn Company (Robert's) Application [1977] RPC 185 (Eng CA).

[134] EPC, Article 52.4.

[13] 5 Royal Commission on Genetic Modification, Report of the Royal Commission on Genetic Modification (2001), 284.

[136] Ibid Recommendation 10.2.

[137] CAB Min (01) 34/15.

[138] Hon Judith Tizard, Review of the Patents Act 1953 Stage 3: Part 1 (2003), 8.

[139] Hon Judith Tizard, above n 63.

[140] US Commissioner of Patents and Trademarks, 'Policy Statement on Patentability of Animals', 24/4/87, 1077 Official Gazette of the Patent Office 24.

[141] United States Constitution, 13th Amendment.

[142] Byron V Olsen, The Biotechnology Balancing Act: Patents for Gene Fragments, and Licensing the "Useful Arts”’ (1997) 7 Albany Law Journal of Science and Technology 295, 317.

[143] The rule dates from a United States decision in 1889, where the Commissioner ruled that it would be 'unreasonable and impossible to allow patents upon the trees and forests of the earth.Exparte Latimer (1889) CD 46 OG 1638.

[144] [1980] USSC 119; (1980) 447 US 303 (USSC).

[145] Diamond v Chakrabarty [1980] USSC 119; (1980) 447 US 303, 307-310. In fact, the microorganism was made not by genetic modification (that is, recombinant DNA) techniques, but by selective mutation.

[146] Ibid, 310.

[147] IP Australia, Official Journal of Patents (1980) 1162.

[148] New Zealand Assistant Commissioner of Patents, 'Directive from the New Zealand Assistant Commissioner of Patents' 4 April 1991. International Association for the Protection of Intellectual Property < 1 50/gr-q 1 50-e-newzealand.htm>

[149] The patent has since lapsed.

[150] Taiwo A Oriola, 'Ethical and Legal Issues in Singapore Biomedical Research' (2002) 11 Pacific Rim Law and Policy 497, 503.

[151] The distinction is also maintained in the Biotechnology Directive. Article 3.2 provides that '[b]iological material which is isolated from its natural environment or produced by means of a technical process may be patentable even if it previously occurred in nature.'

[152] DNA refers to deoxyribonucleic acid, the nucleic acid which stores an organism's genetic information.

[153] Hormone Relaxin (1995) EPOR 541, 550.

[154] Campbell, Reece, Mitchell, above n 6, 76.

[155] G Beadle and E Tatum, 'Genetic control of biochemical reactions in Neurospora' (1941) 27 Proceedings of the National Academy of Sciences of the United States of America 499.

[156] James Watson and Francis Crick, 'A Structure for Deoxyribose Nucleic Acid' (1953) 171 Nature 737.

[157] In re Bergy (1977) 563 F 2d 1031, 1035 (CCPA).

[158] This is explicitly recognised in the Directive, Article 5.2.

[159] Patents Act 1953, s 10(7): "Where a complete specification claims a new substance, the claim shall be construed as not extending to that substance when found in nature."

[160] Compare with the conclusion of the European Group on Ethics in its report whereby only stem cells modified by in vitro treatment or genetic modification are proposed as meeting the requirement of patentable subject matter. European Group on Ethics, Opinion, above n59,16. The conclusion has been justly criticised: "the EGE report has...sidestepped the most difficult questions and has settled for devising its own patentability criteria." R Stephen Crespi, 'Patenting and Ethics: A Dubious Connection' (2003) 85 Journal of the Patent and Trademark Office Society 31, 47.

[161] Tizard and King, above n 64, 1.

[162] Ibid 6.

[163] Ibid 7.

[164] United States Patent and Trademark Office, 'Revised Interim Utility Guidelines Training Materials' (2001), 5-6 United States Patent and Trademark Office < y .pdf>

[165] Ibid 6.

[166] Ibid.

[167] Bostyn, above n 58, 80.

[168] Independent Biotechnology Advisory Council, Cloning and Stem Cell Research (2001), 4.

[169] Hazuka, above n 74, 206.

[170] John M Golden, 'Biotechnology, Technology Policy, and Patentability: Natural Products and Invention in the American System' (2001) 50 Emory Law Journal 101, 178-180.

[171] Donna M Glitter, above n 104, 37. The European Patent Office appears to adopt such an approach. André Remond, General Director, European Patent Office, 'Patentability of inventions using human stem cells' in European Group on Ethics, Opinion, above n 59, 76.

[172] Thus Recital 26 of the Directive suggests that while consent is a desirable prelude to patentability, consent requirements are ultimately a matter for national governance. In Moore v Regents of the University of California (1990) 51 Cal 3d 120 (SC Cal), Moore's doctor removed Moore's spleen with his consent, but then went on to develop a cell line that was subsequently patented and became a commercial success. Although the doctor was found to have breached his fiduciary duty to Moore, the patent was upheld. The issue of consent and its relationship to the patent system has received much informed criticism. See Vaver, above n48, 12; James M McCartney, PhD,'Embryonic Stem Cell Research and Respect for Human Life: Philosophical and Legal Reflections' (2002) 65 Albany Law Review597, 611-612; John A Lee, 'The Ownership and Patenting of Inventions Resulting from Stem Cell Research' (2003) 43 Santa Clara Law Review 597, 624.

[173] Warren, above n 104.

[174] Comptroller-General of Patents, Practice Note: Inventions involving human embryonic stem cells (2003). The UK Patent Office < practice/stemcells/htm>

[175] However, it is possible that in such an analysis, considerations of informed consent may be found to be too far removed from the concerns of the patent system to warrant the withholding of a patent on such grounds.

[176] Royal Commission on Genetic Modification, Report of the Royal Commission on Genetic Modification (2001), 283. Although on a strict view, the only thing a holder of a biotechnological patent 'owns' is the right to petition a court to prevent unauthorised use of the invention in question.

[177] Paul Ratanaseangsuang, 'Patent Pending: Are Higher Life Forms Patentable?' 4 Appeal 14, 20.

[178] Ministry of Economic Development, above n 40, 10.

[179] Hon Judith Tizard, Review of the Patents Act 1953: Stage 3 Part 3 (2003), 1. The development of the Committee was recommended by the Royal Commission. Royal Commission on Genetic Modification, Report of the Royal Commission on Genetic Modification (2001), Recommendation 10.4.

[180] Tizard and King, above n 64, 7.

[181] Capron, above n 16, 689. 182 HealthAct 1956, ss 92A (1), 92B (2).

[183] References to the HART Bill refer to the Bill as amended by the Supplementary Order Paper on 29 April 2003.

[184] HART Bill, Clause 11(1).

[185] Bostyn, above n 58, 84.

[186] House of Lords, above n 13, [4.21].

[187] Melodie Slabbert, 'Cloning and Stem Cell Research: A Critical Overview of the Present Legislative Regime in Australia and the Way Forward(2003) 10 Journal of Law and Medicine 514, 521. Louis M Guenin, Stem Cell Research, the Law, Ethics and Common Sense (1 June 2001), Daily University Science News.

[188] Deontological theories of ethics are generally rooted in the writings of Immanuel Kant. See for example, Mary Gregor (ed), The Metaphysics of Morals (1996), 209.

[189] Roger Brownsword, 'Bioethics Today, Bioethics Tomorrow: Stem Cell Research and the "Dignitarian Alliance”’ (2003) 17 Notre Dame Journal of Law, Ethics and Public Policy 15, 40.

[190] Independent Biotechnology Advisory Council, Cloning and Stem Cell Research (2001), 15.

[191] Ministry of Justice, HART SOP Questions & Answers, [15] Ministry of Justice http://www. justice. go>

[192] Comptroller-General of Patents, above n 174.

[194] Department of Health, Stem Cell Research: Medical Progress with Responsibility (2001), 4-5. UK Department of Health <>

[195] The HART Bill places prohibitions on certain actions, including human reproductive cloning, but permits therapeutic cloning, the creation of embryos, and the use of supernumerary embryos for stem cell research subject to the issuance of certain guidelines. HART Bill, Clauses 7(1), 5(3).

[196] Directive 98/44/EC, Article 6.2(a), Recital 41.

[197] The ambiguity arises through the use of the term 'human being'.

[198] See above fn 117.

[199] Nino Pires de Carvalho, The Budapest Treaty and its Applicability to Human Stem Cell Lines' cited in European Group on Ethics, Opinion on ethical aspects of patenting inventions involving human stem cells (2002), 101, 105.

[200] See for example NZ Patent No 194786 'Human proinsulin and preproinsulin genes'; NZ Patent No 210501 'Production of erythropoietin'; NZ Patent No 281761 'Human growth hormone'; NZ Patent No 237995 'Human Neuronal Cell Line'; NZ Patent No 294906 'Human cell-lines'; NZ Patent No 506944 'Immortalised cell line derived from normal human skin tissues'.

[201] Australian Patent Office Manual of Practice and Procedure, Vol 2, [8.2, 8.5]; IP Australia, 'Submission 274: House of Representative Standing Committee on Legal and Constitutional Affairs Inquiry Into the Scientific, Ethical and regulatory Aspects of Human Cloning' (2001). Parliament of Australia <> However, to date, there has been no judicial consideration of the provision in Australia.

[202] The English Patent Office has recently issued a practice note stating that it will not grant patents for human totipotent stem cells, under para 3(a) of schedule A2 to the Patents Act 1977 (UK) (Article 5.1 of the Directive). UK Patent Office < patent/notices/practice/stemcells/htm>

[203] SCNT refers to somatic cell nuclear transfer, discussed above. Cross species SCNT refers to the process where the enucleated egg cell is of a species different to the nucleus donor cell.

[204] Vaver, above n48, 16. Countries appear to be 'engaged in a game of catch-up, fearing that they will be left behind if their intellectual property laws are not at least as protective as.. those of the United States.'Ibid.

[205] Arti Rai, cited in Matthew Rimmer, above n 93, 497.

[206] Wisconsin Alumni Research Foundation, 'Primate Embryonic Stem Cells' US Patent 6,200,806.

[207] This condition has been termed the tragedy of the anticommons. MA Heller, RS Eisenberg 'Can Patents Deter Innovation? The Anticommons in Biomedical Research' (1998) 280 Science 698.

[208] See Rebecca S Eisenberg, 'Technology Transfer and the Genome Project: Problems with Patenting Research Tools'(1994) 5 RISK 163, 175, citing Kozinski Jin Vanna White v Samsung Elecs Am, Inc [1993] USCA9 840; (1993) 989 F 2d 1512, 1513 (9 Cir): 'Private property, including intellectual property, is essential to our way of life ... but reducing too much to private property can be bad medicine. Private land, for instance, is far more useful if separated from other private land by public streets, roads and highways. Public parks, utility rights-of-way, and sewers reduce the amount of land in private hands, but vastly enhance the value of the property that remains. So too is it with intellectual property. Overprotecting intellectual property is as harmful as underprotecting it. Creativity is impossible without a rich public domain.'

[209] In New Zealand, claims may be narrowed at examination, opposition or by the Court during revocation proceedings. Section 39(1) of the Patents Act 1953 provides that if, in any proceedings for revocation the Court decides that a patent is invalid, the Court may allow the specification to be amended rather than revoking the patent.

[210] Hazuka, above n 74, 207.

[211] The latter claims would therefore fail to meet the proposed, stricter utility requirement.

[212] IP Australia, Patent Information (2002). IP Australia <>

[213] Both requirements are dictated by 35 USC 112.

[214] In re Wright [1993] USCAFED 529; (1993) 999 F 2d 1557, 1561 (Fed Cir); Genentech, Inc v Novo Nordisk A/S (1997) 108 F 3d 1367 (Fed Cir).

[215] Vas-Cath vMahurkar [1991] USCAFED 455; (1991) 935 F 2d 1555, 1563-4 (Fed Cir).

[216] USPTO, 'Guidelines for Examination of Patent Applications under the 35 USC 112(1) Written Description Requirement' (5 Jan 2001) 66 Fed Reg 1099, 1106.

[217] [1999] USCAFED 171; (1999) 188 F 3d 1362 (Fed Cir).

[218] [1999] USCAFED 171; (1999) 188 F 3d 1362, 1371-2 (Fed Cir). See also Amgen, Inc v Chugai Pharmaceutical [1991] USCAFED 309; (1991) 927 F 2d 1200, 1214 (Fed Cir) where the Federal Circuit narrowed a claim to all DNA sequences encoding any protein that increased the activity of erythropoietin (EPO), where only one 'gene and a handful of analogs' with unascertained activity had been made. Adang vFischhoff (2002) US App LEXIS, Case No 01-1169 (Fed Cir) provides a recent example.

[219] InReHogan (1977) 559 F 2d 595, 606 (CCPA).

[220] (2001) 126 F Supp 2d 69 (D Mass).

[221] The Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (28 April 1977). New Zealand has not yet acceded to this Treaty, despite recommendations to do so. New Zealand Institute of Patent Attorneys, Submission to the Royal Commission on Genetic Modification, 2 <>

[222] The WIPO's Guide to the Deposit of Microorganisms under the Budapest Treaty states that whether an entity technically is or is not a microorganism matters less in practice than whether deposit of that entity is necessary for the purposes of disclosure.

[223] Hazuka, above n 74, 211-2.

[224] Christopher R Carroll, 'Selling the Stem Cell: The Licensing of the Stem Cell Patent and Possible Antitrust Consequences' (2002) University of Illinois Journal of Law, Technology and Policy 435, fn 47.

[225] Patents Act 1953, s 46(1).

[226] Patents Act 1953, s 46(2).

[227] Patents Act 1953, s 46(7).

[228] Janice M Mueller,'No Dilettante Affair: Rethinking the Experimental Use Exception to Patent Infringement for Biomedical Research Tools' (2001) 76 Washington Law Review 1, 41, 65-6.

[229] It is significant that the most profitable of all university-originating patents, the patent on the Cohen-Boyer gene-splicing invention, has also been the most widely licensed; William Kingston, 'Intellectual Property Needs Help from Accounting' (2002) 24 European Intellectual Property Review 508, 509.

[230] Vaver, above n 48, 17.

[231] The Patents Amendment Act 1994 altered the compulsory licensing provisions in New Zealand. Previously, s 51 of the Act created a presumption in favour of the issuance of a compulsory licence for patents concerning food and medicine. Under this section relevant factors included not only price, but also speed of distribution, and quality and availability of the product. Glaxo Group Ltd v Commissioner of Patents [1991] NZCA 203; [1991] 3 NZLR 179, 194 (CA); Merck & Co Inc v Commissioner of Patents (1991) 4 TCLR 388 (HC).

[232] (1961) 78 RPC 403 (UK Patent Office).

[233] Glaxo Group Ltd v Commissioner of Patents [1991] NZCA 203; [1991] 3 NZLR 179, 193.

[234] Patents Act 1953, ss 46(6), 46(4).

[235] ER Squibb & Sons Inc v Pacific Pharmaceuticals [1993] 3 NSLR 240, 243 (HC) per Heron J, concerning s 31 of the Act (now repealed) which allowed for extension of patent term.

[236] JP Karp, 'Experimental Use as Patent Infringement: The Impropriety of a Broad Exception (1991) 100 Yale Law Journal 2169, 2183. Mueller, above n 228, 62. Mueller further proposes that, in situations where a commercial product is not ultimately produced, a standardised schedule of royalty fees could be enacted.

[237] Indeed, WARF has negotiated a similarly termed agreement with the United States Public Health Service (PHS), granting PHS researchers using its cell lines 'a limited, revocable, non-commercial, research licence' to WARF's patent rights. WARF retains reach-through intellectual property rights in any commercial products stemming from the research. Memorandum of Understanding Between WiCell Research Institute, Inc and Public Health Service, US Department of Health and Human Services (5 September 2001). WARF will extend the same terms to all researchers at publicly funded, non-profit institutions, provided the researchers enter into a separate written agreement with WARF. National Institute of Health <>

[238] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 546 per Gault J. The research exemption is a permitted exception to patent rights under Article 30 of the TRIPS agreement.

[239] Monsanto Company v Stauffer Chemical Company (NZ) (1984) 1 New Zealand Intellectual Property Review 518, 531 (CA).

[240] Ibid 533, per Eichelbaum J.

[241] MadeyvDuke University [2002] USCAFED 222; (2002) 307 F 3d 1351, 1362 (Fed Cir).

[242] Patents Amendment Act 2002, s 68B. Comparative provisions in other countries also include a patent extension provision, where the term of patent protection can be extended for a specified period because of the necessity of gaining regulatory approval. Doug Calhoun, 'Editorial: Actions speak louder than words: are cost accountants or innovation champions driving IP reform?' (2003) 3 New Zealand Intellectual Property Journal 146, 146.

[243] Smith Kline & French Laboratories Ltd v Attorney-General [1991] 2 NZLR 560, 562 (C A) per Cooke P. The provision was introduced in the Statutes Amendment Bill (No 2) at Select Committee stage. Its insertion has therefore been subject to criticism due to the lack of public consultation regarding the amendment. Calhoun, above n 242, 146-7.

[244] This seems to be the approach taken to the experimental use exemption by the Japanese courts. Jennifer A Johnson, The Experimental Use Exception in Japan: A Model for US Patent Law?' (2003) 12 Pacific Rim Law and Policy 499, 517-8.

[245] Royalty stacking occurs when many patents are issued for inventions before the invention have any valid marketability. Researchers must therefore pay royalties to use the discovery, even though it may eventually have little or no value to the final invention marketed to the public. Royalty stacking thus increases the costs of research. Mueller, above n 228, 57.

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