Federal Court Case Notes

Patentability of isolated nucleic acid used to detect gene mutations linked to breast and ovarian cancer

D’Arcy v Myriad Genetics Inc [2014] FCAFC 115

Full Court (Allsop CJ, Dowsett, Kenny, Bennett & Middleton JJ)

5 September 2014

The appellant challenged the validity of an Australian patent that included claims for isolated nucleic acid sequences that can be used to detect mutations of the BRCA1 gene which is linked to various forms of cancer, including breast and ovarian cancer.  The claims relate to naturally occurring nucleic acid (DNA or RNA) that has been removed from the cellular environment in which it naturally exists and separated from other cellular components found there. 

The appellant submitted that isolated nucleic acid is not materially different from cellular nucleic acid and that naturally occurring DNA and RNA, even in isolated form, are products of nature that cannot form the basis of a valid patent.  The appellant submitted that the claims were not an invention within the meaning of section 18(1) of the Patents Act 1990 (Cth) as they were not claims to a manner of manufacture and were not the proper subject matter for a patent.

Held: The claims were for tangible material, namely a compound that has been isolated or removed from the cell, rather than information. The claims were a patentable invention within the meaning of the Patents Act 1990 as the isolated nucleic acid was structurally and functionally different from its natural counterpart and the resulting artificially created state of affairs led to an economically useful result, namely the treatment of breast and ovarian cancers. Although the isolated DNA could be characterised as material derived from naturally occurring material, this is not excluded from patentability within the reasoning of National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252.

The Full Court expressed caution with the approach adopted by the United States Supreme Court in Myriad Genetics.

An application for special leave to appeal against the decision has been filed with the High Court.

Legality of an investigation undertaken by ASADA in collaboration with the AFL

Essendon Football Club v Chief Executive Officer of the Australian Sports Anti-Doping Authority  [2014] FCA 1019

Middleton J

19 September 2014

The Essendon Football Club and Senior Coach, James Hird, brought proceedings under section 39B of the Judiciary Act 1903 (Cth) in relation to actions taken by the Chief Executive Officer of the Australian Sports Anti-Doping Authority (ASADA).  It was alleged that an investigation undertaken by ASADA, in collaboration with the Australian Football League (AFL), into possible anti-doping violations by the Club was unlawful because ASADA had no power to conduct a ‘joint investigation’ and the investigation was conducted for improper purposes including taking advantage of the AFL’s power to compel attendance, production of documents and answers to questions, powers not available to ASADA.  It was also alleged that ASADA breached its confidentiality obligations and acted for an improper purpose in providing information from the investigation, including the Interim Report, to the AFL.

The Australian Sports Anti-Doping Authority Act 2006 (Cth) envisaged that sporting administration bodies such as the AFL would assist and give information to ADADA in relation to certain matters.

Held: ASADA complied with the rule of law in establishing and conducting the investigation.  The investigation was undertaken by ASADA for the legitimate purpose of investigating possible anti-doping violations, not for the purpose of ‘harnessing’ the AFL’s compulsory powers.  ASADA did not communicate or divulge information to the AFL because representatives of both ASADA and the AFL were in the room when Mr Hird and 34 players provided information to the AFL and ASADA; the AFL received the information directly from Mr Hird and the 34 players.  Although the CEO of ASADA provided the Interim Report to the AFL knowing that it would be used for the purpose of bringing disciplinary charges it was given to the AFL for both ‘the purposes of’ the continuing ASADA investigation and ‘in connection with’ the ASADA investigation as permitted by section 13(1)(g) of the Australian Sports Anti-Doping Authority Act 2006.  The CEO of ASADA has the power to do all things ‘convenient’ to be done ‘in connection’ with the performance of his or her functions, including those set out in s 21 of the Australian Sports Anti-Doping Authority Act 2006.

Mr Hird has filed an appeal with the Full Court of the Federal Court. Essendon has chosen not to appeal.

Representative proceedings involving more than one respondent

Cash Converters International Ltd v Gray [2014] FCAFC 111

Full Court (Jacobson, Middleton and Gordon JJ)

1 September 2014

The applicants sought leave to appeal from interlocutory orders of the primary judge who had declined to strike out a statement of claim rejecting the contention that, in representative proceedings involving more than one respondent, section 33C of the Federal Court of Australia Act 1976 (Cth) requires each group member to have a claim against each respondent.  

The Court noted there was conflicting authority of the Full Court of the Federal Court and inconsistent decisions of single judges of the Court.

Held: There is nothing in section 33C or Part IVA of the Federal Court of Australia Act 1976 (Cth), of which section 33C is a part, that requires every group member to have a claim against all respondents where there is more than one respondent.  The decision of the Full Court in Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 was not followed on the basis that, in that case,  the issue had been accepted by the parties and was therefore not in dispute.

Interlocutory order against non-party to protect the Court’s adjudicative and deliberative processes

Brosnan v Katke [2014] FCA 974

Greenwood J

10 September 2014

In the principal proceeding the applicants claimed they had been induced to enter an agreement to sell shares in a company (Health World Limited) on the basis of misleading representations made by the respondents.  The relief sought included orders under section 87 of the Trade Practices Act 1974 (Cth) to set aside the settlement deed and transfer the shares back to the applicants.  At the time of the interlocutory application, Health World Limited was not a party to the principal proceedings and no relief was sought against the company.

After a four week trial, during which substantial questions of fact and law were raised, the judgment was reserved to allow the processes of deliberation and adjudication to be completed.  The employment agreements of two senior Health World Limited executives, including the Managing Director/Chief Executive Officer, were due to expire before the judgment was delivered. The applicants sought interlocutory orders against Health World Limited to preserve the integrity and cohesion of the management group and the value of the business pending publication of the judgment.

Held:  The Court ordered Health World Limited, a non-party to the principal proceeding, to retain two senior executives in their present roles from the date their employment agreements expired until 14 days after the judgment was delivered. The order was subject to undertakings by the senior executives to discharge their responsibilities in good faith during that period.  Section 23 of the Federal Court of Australia Act 1976 (Cth) provided the foundation for the Court to make such orders in aid of final relief and to protect the integrity of the Court’s adjudicative and deliberative processes.

An application for leave to appeal to the Full Court has been granted.

Interlocutory indemnity costs order against respondent vacated after applicant granted leave to discontinue proceedings

Ashby v Slipper [2014] FCA 973

Flick J

11 September 2014

After the Court granted leave for the applicant, James Ashby, to discontinue a proceeding against former Speaker of the Federal Parliament, Peter Slipper for adverse action in the form of sexual harassment and breach of employment contact, Mr Slipper applied to vacate an indemnity costs order that had been made against him earlier in the proceeding.

The indemnity costs order had been made when Mr Slipper amended his claim that the proceeding against him was an abuse of process, vexatious, and unlawful, withdrawing the allegations of unlawfulness in order to reduce the complexity of the evidence and the delay that would result from having to serve notices of constitutional cause under section 78B of the Judiciary Act 1903 (Cth).  The claim of abuse of process was subsequently upheld by the judge at first instance but overturned on appeal by a majority of the Full Court.

Held: The Court accepted that it would be unfair to permit Mr Ashby to walk away from the proceeding he had instituted whilst retaining the benefit of the indemnity costs order.  The discontinuance of the proceeding left unresolved the allegations which had attracted considerable media attention and had been actively contested.  The Court ordered that the indemnity costs order against Mr Slipper be vacated. 

Vesting of security interest over personal property in company in liquidation where security interest perfected by registration alone 

Pozzebon (Trustee) v Australian Gaming and Entertainment Ltd, in the matter of Australian Gaming and Entertainment Ltd (in liq) [2014] FCA 1034

Collier J

24 September 2014

A security interest granted to the applicant by the respondent company was registered on the Personal Property Securities Register almost 5 months after the interest was created and a week before the company was placed into voluntary administration.  The applicant sought a declaration that the security interest was valid and enforceable against the respondent company and had not vested in the company under section 588FL of the Corporations Act 2001 (Cth) because it was not perfected by ‘registration, and no other means’ as required by that section.  The applicant submitted that perfection had been by attachment and enforceability and effective registration under section 21 of the Personal Property Securities Act 2009 (Cth).

Held: When section 588FL of the Corporations Act 2001 (Cth) refers to ‘the security interest [being] perfected by registration, and by no other means’ that section is distinguishing ‘registration’ as a means of perfection from ‘possession’ and/or ‘control’ and is not distinguishing ‘registration’ from ‘attachment’ and/or ‘enforceability.’  As the only means by which the security interest was perfected was by registration the security interest was not valid and enforceable against the respondent company.