Intellectual Property Laws Amendment Bill
In brief: As reported in the previous edition of Biotech News, the Intellectual Property Laws Amendment Bill 2006 was introduced into the House of Representatives on 30 March 2006. Senior Associate Jonathan Gottschall and Patent Attorney Anthony Selleck outline the major amendments proposed by the Bill in relation to patent rights.
Introduction
The Intellectual Property Laws Amendment Bill 2006 (the Bill) was introduced into the House of Representatives on 30 March 2006. Of particular interest to the Australian biotechnology sector are the provisions of the Bill relating to patent rights, and most significantly:
- patent enforcement;
- springboarding on pharmaceutical patents; and
- compulsory licensing.
This article contains a summary of the relevant provisions and a brief discussion of their likely effect on industry.
Draft regulations to fully implement a number of provisions in the Bill have not been promulgated and will no doubt be made once the Bill has progressed through Parliament. AAR will be closely monitoring the progress of the Bill and reporting further on the impact of the provisions in due course.
Patent enforcement
The Bill includes amendments that will impact on patentees' rights to enforce patents that will come into effect immediately after the legislation receives royal assent. A positive development for patentees is the inclusion of provisions giving courts broader scope in awarding damages. The Bill does, however, extend the ambit of the defence of prior use. This amendment will thus further limit a patentee's rights where there has been prior undisclosed independent development of the patented technology.
Exemplary damages
The Patents Act 1990 (Cth) currently allows courts to award compensation for patent infringement on the alternative bases of either damages (loss suffered by the patentee) or an account of profits (the infringer's unjust gain). Compensation in either case is limited to the amount of money that can be attributed to the infringement. The amendment in the Bill adds a new provision to the Patents Act allowing courts to provide additional compensation to the patentee – referred to as 'exemplary damages' – where it is appropriate in the circumstances. Factors the court will need to consider in determining whether exemplary damages are appropriate include the flagrancy of the infringement, the need to deter similar infringements and the unjust benefits the infringer has obtained. The provisions in the Bill are modelled on corresponding provisions in the Copyright Act 1968 (Cth). While the Copyright Act provisions are only used occasionally, courts have become more willing in recent years to award exemplary damages in appropriate cases.
Prior use
The Patents Act currently provides a 'prior use' defence to patent infringement. The defence applies in cases where a party was using an invention, or taking definite steps in preparation to use it, before another party applied to patent it. If such use was in the public domain it would, of course, provide a ground of revocation of the patent, and the defence of 'prior use' therefore generally refers to secret prior use.
The amendments in the Bill are intended to clarify the scope of the defence and allow for its assignment.
Under the Bill, the prior use defence is limited to prior use of the invention (or definite steps in preparation to use it) in Australia. This makes clear that the defence is not available to parties that may be able to show prior use of the invention overseas.
The Bill includes a broad definition of the term 'exploit' and uses this to define the conduct that gives rise to the defence. The purpose of this amendment is to clarify that the prior use defence encompasses acts that would otherwise constitute infringement, including, for example, research activity that has not necessarily reached the commercialisation stage. The amendments therefore provide parties having research and development activity greater confidence that the benefit of their work will not be lost as the result of another party applying to patent an invention before them.
The Bill allows the rights of a prior user to be assigned to another party. This recognises the fact that parties who develop technology will not necessarily commercialise the technology themselves, but may choose to assign to another party. Under the Bill, a party will now be able to assign (but not to license) their 'prior use' right to the invention.
Overall, the amendments to the prior use defence provide parties engaged in research activities with a clearer and better defined right to continue their research and to commercialise research outcomes, but at the cost of expanding the prior use exception to the rights enjoyed by patentees.
Springboarding on pharmaceutical patents
In the context of the Bill, 'springboarding' refers to the use of a patented pharmaceutical product, during the term of the patent, for the purpose of collecting data that is required to obtain regulatory approval of a generic version of the product. The Bill contains provisions that, if passed, will significantly widen the circumstances in which springboarding by generic pharmaceutical companies is permitted in Australia.
Currently, pharmaceutical patent springboarding is only permitted in respect of patents for which an extension of term has been granted, due to delays in obtaining marketing approval for the relevant product. The Bill permits springboarding in respect of all pharmaceutical patents, irrespective of whether the patent in question has been granted an extension of term.
The term 'pharmaceutical patent' has been defined widely to encompass patents that claim both pharmaceutical substances per se and methods, uses or products 'relating to' pharmaceutical products. This wide definition is intended to cover all patents that a generic pharmaceutical company would need to exploit in order to seek inclusion of a product – other than a medical or therapeutic device – on the Australian Register of Therapeutic Goods.
Although the Bill provides that springboarding in respect of Australian patents will be permitted for the purpose of obtaining regulatory approval in a foreign country, pharmaceutical substances may only be exported if the term of the patent in question has been extended. Further, stockpiling a patented product for subsequent sale remains an infringing act.
Compulsory licensing
The compulsory licence provisions of the Patents Act provide a mechanism to make use of patented inventions in circumstances where the reasonable requirements of the public with respect to those inventions have not been satisfied and the patentee provides no satisfactory reason for not exploiting the invention. Although the provisions have been seldom used, one rationale for their existence is that they may nevertheless positively impact on voluntary licensing negotiations (and hence encourage innovations to be worked in Australia) by offering an inducement to patentees to grant licenses on satisfactory terms.
The Bill adds an additional ground upon which a compulsory licence may be sought, which is where a patentee has engaged or is engaging in 'anti-competitive conduct' (as defined in Part IV of the Trade Practices Act 1974 (Cth)) in connection with the patent. This additional ground is intended to increase accessibility to patented inventions. The rights of a patentee to resist a grant of a compulsory licence by providing a satisfactory reason for not exploiting an invention and, if a licence is granted, to proper remuneration, will be maintained.
Jurisdiction to hear applications for compulsory licences will be removed from the state Supreme Courts to become exclusively the jurisdiction of the Federal Court.
For further information, please contact:
- Sarah MathesonPartner,
Melbourne
Ph: +61 3 9613 8579
Sarah.Matheson@allens.com.au