Australia's biotechnology industry is warning a court challenge against the patenting of human genetic material could kill off investment in the industry.

Lawyers have begun legal action against four biotechnology companies, which co-own the patent to a gene known as BRCA1, linked to an increased risk of breast and ovarian cancer.

They say companies should not have the right to commercialise the human body.

But representatives of the biotechnology industry say the landmark legal case could stifle innovation and investment in important medical research.

The action is brought by the law firm Maurice Blackburn, Cancer Voice Australia and a Brisbane woman with breast cancer, Yvonne D'Arcy. They will argue that it is wrong for private company to have patents over human genetic material.

"The narrow legal issue is that human genetic material is not patentable because patent law is intended to cover inventions not discoveries," the principal lawyer on the case, Rebecca Gilsenan, said.

The action against four biotechnology companies focuses on BRCA1, but Ms Gilsenan says the case will have implications for thousands of patents granted on genetic material.

"In patent law, what has been happening in Australia for many years now is that IP Australia has been granting these patents over isolated genetic material and an Australian court has never been asked to rule on or to clarify the lawfulness of this practice, and so that's why this case is groundbreaking," she said.

One of the four companies is Melbourne-based Genetic Technologies Limited (GTL), which holds the exclusive licence of the patent in Australia.

GTL's chief executive officer Paul MacLeman says they are acting well within their legal rights.

"We're just a small Australian biotech, we employ about 80 people, we're just seeking to get on with our business and part of that ... is just playing by the rules as they stand right now," he said.

"If the powers that be wish to change those rules we'll play by the new rules."

Dr MacLeman is concerned that removing patents will have a detrimental impact on investment in the industry.

"Without the protection of a patent, there's no incentive for anybody to develop a commercial product and while these institutes in the various places around Australia are offering the BRCA test, they wouldn't be in a position to do so had it not already been commercially developed in the US," he said.

Similar concerns are held by the chief executive of BioMelbourne Network, Michelle Gallaher.

"If the case goes through and we're no longer able to patent genes, it throws into question a lot of research and development that may be halted along the pipeline," she said.

"Biotech companies are not going to invest heavily in developing some of these tests if they don't have some degree of the potential for a return on their investment by getting a product to the market and having a degree of monopoly for some period of time."

But patent expert law expert Professor Luigi Palombi, from the Australian National University, rejects the claims that removing patents will have a detrimental impact.

"I think it will have the reverse effect, because what it's going to do if we get the decision we want - which is to get rid of patents on genes - what it will do is free up those sorts of materials for use in new and inventive ways," he said.

"We want the biotechnology sector to focus on inventions which will use genes to deliver better diagnostics, better treatments and better cures - well, cure, period.

"That's not going to happen if we're locking up raw fundamental data of the human genome in patents. It just won't happen."

A Senate Committee inquiry into gene patents is still underway. It was supposed to report back later this month, but the Committee chair, Greens Senator Rachel Siewert, says that time frame will now be extended.

"We have already discussed extending our reporting date because of the need for further information and the issues that the court case in America rises and obviously there's now the Australian court case," she said.

"So we will be asking the Senate, because it's not up to us - we have to ask the Senate to extend our reporting date."

Senator Siewert says she is hoping to report within several months.