A reminder that a number of changes to IP laws commenced on 27 February 2020 including, relevant to IP commercialisation, changes recommended by the Productivity Commission to the rarely-used Crown use and compulsory licence provisions. It will be interesting to see whether these amendments increase the use of these provisions, and if they affect the attractiveness of the 2015 provisions relating to compulsory licences of patented pharmaceutical inventions for manufacture and export.
Lexi Vanguard and Jeff Bergmann outline the key changes.
Crown Use of patents, patent applications and designs
The amendments introduce a separate process for emergency use by the Crown, but otherwise generally preserve the existing regime, albeit in a more codified and structured form, of the circumstances in which a patent or patent application can be exploited by or for the Commonwealth or a State or Territory, or for the services primarily funded by an authority of any of them. Corresponding amendments are made to the Designs Act 2003.
There are now two types of circumstances where exploitation of an invention is not an infringement.
As a general rule, where:
- the relevant Minister considers that the relevant authority has tried for a reasonable period, but without success, to obtain authorisation to exploit the invention on reasonable terms;
- the relevant Minister approves, in writing, the exploitation;
- the invention is exploited for Crown purposes;
- if the exploitation is by a person authorised by a relevant authority, the person is authorised by the relevant authority before the exploitation starts; and
- at least 14 days before the exploitation starts, the relevant authority gives the applicant/patentee a copy of the approval and a written statement of reasons for approving the exploitation.
In an emergency, where:
- the relevant Minister considers that the exploitation is required because of an emergency;
- the relevant Minister approves, in writing, the exploitation before the exploitation starts;
- the invention is exploited for Crown purposes; and
- if the exploitation is by a person authorised by a relevant authority, the person is authorised by the relevant authority before the exploitation starts.
As soon as practicable after the relevant Minister approves the proposed exploitation, the relevant Minister must give the applicant/ patentee a copy of the approval and a written statement of reasons for approving the exploitation
The amendments also specify that, if the parties seek to have the Court determine the remuneration payable by the Crown for such use, the Court must determine an amount of remuneration that is just and reasonable, having regard to “the economic value of the exploitation of the invention” and any other matter the court considers relevant. Previously the Court was not required to have regard to any particular matter.
Compulsory licensing of patents
Whilst the amendments preserve scope for the Federal Court to grant a compulsory licence where the patentee has contravened Part IV of the Competition and Consumer Act 2010 (CCA), the other circumstances in which the Federal Court may grant a compulsory licence of a patent have been amended.
Previously the main criterion for such a grant was “if the reasonable requirements of the public are not being met”. Now the court must be satisfied that all of the following conditions exist, including a “public interest” test:
- demand in Australia for the original invention is not being met on reasonable terms;
- authorisation to exploit the original invention is essential to meet that demand;
- the applicant has tried for a reasonable period, but without success, to obtain authority from the patentee to exploit the original invention on reasonable terms and conditions; and
- the patentee has given no satisfactory reason for failing to exploit the patent to the extent necessary to meet the demand for the original invention in Australia.
The “public interest” test requires the court to assess whether it is in the public interest to provide the applicant with authorisation to exploit the original invention, having regard to the following:
- the benefits to the public from meeting the demand for the original invention;
- the commercial costs and benefits to the patentee and the applicant from providing authorisation to exploit the original invention; and
- any other matters the court considers relevant, including matters relating to greater competition and any impact on innovation.
Also, if the applicant is the patentee of another invention (the dependent invention) and is seeking the authorisation for the purposes of exploiting the dependent invention, the court must be satisfied that:
- the dependent invention cannot be exploited by the applicant without exploiting the original invention; and
- the dependent invention involves an important technical advance of considerable economic significance on the original invention.
Notably, paragraph this final criterion is now limited to the situation where the applicant for the compulsory license is the patentee of the dependent invention. Previously the provisions operated where the patentee of that invention was a third party.
The amendments also specify that, if the parties seek to have the Court determine the remuneration to be paid in respect of such a licence, the Court must determine an amount as is just and reasonable, having regard to all of the following factors (previously only the first two criteria listed below were specified):
- the economic value of the licence;
- if the order is made because the court is satisfied that the patentee has contravened, or is contravening, Part IV of the CCA in connection with the patent—the desirability of discouraging contraventions of that Part;
- the right of the patentee to obtain a return on investment commensurate with the regulatory and commercial risks involved in developing the invention; and
- the public interest in ensuring that demand in Australia for the original invention is met on reasonable terms.