Genetic engineering is the most important tool for experimental biologist to come out of the twentieth century.1
The tool of genetic engineering is now widely used in biological sciences in New Zealand and is a key aspect of a knowledge economy.2 This paper is a discussion of the relationship between biotechnology, including genetic engineering and intellectual property law. It will be asserted that the promotion of biotechnological research is important for New Zealand and that a strong system of intellectual property protection for the results of biotechnological innovation is a key means of doing so. The key intellectual property rights available in New Zealand for biotechnological innovation are plant variety rights and patents. Patent law will be discussed with reference to the social contract that underpins the granting of a patent. In achieving the aim of encouraging research, two aspects of patent law are particularly relevant: the scope of an experimental use exclusion from patent infringement and the nature of an inventive step. The scope of a patent monopoly and the requirement of public disclosure will also be discussed.
The term 'knowledge economy' refers to three features which characterise the current age and distinguish it from the earlier industrial era.3 First, intellectual property now makes up a greater part of industrial capital. Raw materials and machinery have given way to skills and knowledge as the primary source of sustainable long-term competitive advantage. Secondly, more research and development funding is originating in the private sector while public funding of research is dwindling. In New Zealand government funding of science peaked in 1981 and has declined since.4 Thirdly, new technologies have emerged which challenge the accepted notions about intellectual property:' [i]t is clear that the invention of a new gene cannot be handled in the same way as the invention of a new gearbox'.5
II. International Context
International trade creates a demand for strong intellectual property rights that are enforceable in foreign markets. The monopoly that China enjoyed in the silk trade lasted for three thousand years, protected by the promise of a painful death to anyone who revealed the secret of the silk worms.6 By AD550 the value of silk was so great the Roman Emperor Justinian persuaded a pair of Nestorian monks to smuggle some silkworm eggs out of China in a hollow bamboo cane. The venture was successful and the monopoly was broken. China is also the origin of the plant that became the kiwifruit. Kiwifruit seeds were obtained from China and bred, in New Zealand, into commercially successful varieties. No intellectual property rights were sought for the results of this research and development.7 Plant variety rights were not available in New Zealand at that time. The selling of kiwifruit on international markets led to the commercial production of the fruit in other countries on a scale that was detrimental to the New Zealand growers. Thus, the developmental effort made by New Zealand breeders was compensated for by only a very short period of market exclusivity.
In 1999 about 65,000 apple trees of the varieties Pacific Rose and Southern Snap, bred and developed in New Zealand, were found growing in Chile.8 These apple varieties had been developed, at a cost of considerable time, money and effort, to have improved characteristics giving an advantage over other apple varieties in the international markets. Strong intellectual property rights enable New Zealand right holders to control the exploitation of technology developed here and ensure the benefits of research investment are protected. To be effective in an international market, these intellectual property rights must be able to be asserted in foreign countries such as Chile.
International agreements have sought to facilitate trade and protect intellectual property rights. Two of these are particularly relevant to New Zealand's biotechnology-based industries. The International Convention for the Protection of New Varieties of Plants 1961 (UPOV)9 now has a membership of over fifty countries in which plant variety rights conferred by member states will be recognised. Under the GATT Treaty, the Agreement on Trade Related aspects of Intellectual Property Rights (TRIPS) aims to promote international consistency in the recognition of all forms of intellectual property rights. This agreement sets out minimum standards on the strength, form, duration and enforcement of intellectual property rights for all members of the World Trade Organisation. New Zealand is a signatory to both instruments.
The international standardisation of intellectual property rights brought about by the TRIPS agreement, the historical linkage between New Zealand's legislation, and earlier United Kingdom statutes, mean that case law from other jurisdictions is relevant to many patent issues in this country. Few biotechnology patent issues have come before the New Zealand courts, so it is worthwhile to examine foreign case law. In particular, the House of Lords' decision in Biogen v Medeva10may be of significant persuasive authority.
III. Biotechnology and New Zealand
The New Zealand economy is heavily dependent on primary industries. Biotechnological research is an essential factor in maximising the returns from these industries.11In many areas of biotechnology, New Zealand is at the forefront of international research efforts. It is in the national interest to encourage these research efforts. One way of encouraging research is to have a strong system of intellectual property protection for the products of innovative research. Basic research produces the building blocks of innovation. It is therefore necessary to fund basic research adequately. The participation of the private sector can supplement public investment in research and development. However, increasing the involvement of the private sector requires the provision of incentives to invest in research and development. Intellectual property rights can provide this incentive.