On 25 July 2019 the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 And Other Measures) Bill 2019 (Bill) was introduced to Parliament via the Senate.
The Bill is similar, although not identical, to the exposure draft of the Bill released by IP Australia (Exposure Draft) the subject of our publication dated 1 November 2018.
The Bill proposes changes to the Patents Act 1990 (Cth) (Patents Act), the Designs Act 2003 (Cth) (Designs Act) and the Trade Marks Act 1995 (Cth) (TM Act).
Inventive Step Requirement
In Australia, a standard patent must possess an ‘inventive step’, to be protected. Whether this inventive step exists is determined by examining whether the claimed invention is obvious to a skilled person in the relevant field, in view of information commonly known or used, or information made publicly available by publication or use (referred to as a prior art base).
The Exposure Draft had proposed to raise the threshold of this test so that it was consistent with the international standard, in order to effectively filter out ‘low value patents’. The proposed amendment in the Exposure Draft would have expanded the scope of what is considered the prior art base to include information such as information in a document that is publicly available whether in or out of the patent area, information made publicly available through doing an act, whether in or out of the patent area, a combination of the above information reasonably expected to have been combined and information that is common general knowledge.
However, this section of the Exposure Draft is not in the Bill. IP Australia received responses to the Exposure Draft. The Government has decided to postpone these changes and further consultation will take place in relation to this aspect of the Exposure Draft.
In its review of the Patents Act, the Productivity Commission suggested that given the scope for administrative and judicial interpretation to ‘diverge over time from the intent of policy’, the implementation of an objects clause is essential in making clear Parliamentary intent.
It has been stated that the introduction of the objects clause will improve the likelihood that Court decisions will align with policy objectives, and ensure the Australian patent system remains effective and adaptive as economies and business models evolve.
The object clause emphasises:
- Economic development;
- The transfer and dissemination of technology; and
- Balancing the interests of producers, owners and users of technology.
The object clause provisions of the Bill are unchanged from the terms of the Exposure Draft.
Innovation patent system
In Australia, it is possible to apply for an innovation patent, which may be registered where an applicant’s invention is different from previous inventions, and involves an innovative, rather than inventive, step. Innovation patents have a shorter duration and are not examined until requested by the patentee or a third party. Accordingly, innovation patents are not legally enforceable until examination has occurred.
The Productivity Commission and the former Advisory Council on Intellectual Property have previously advocated for a review of innovation patents, claiming that they provide relatively minimal benefits, and impose significant costs on third parties.
This amendment in relation to innovation patents was not passed as part of the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018, however it did appear in the Exposure Draft and the terms of the Exposure Draft in that regard are unchanged in the Bill.
Crown use of patents and designs
Crown use provisions permit the government (Federal, State and Territory) to exploit certain patented inventions or designs without authorisation from the patentee or registered owner. Under current legislation, Crown use can be invoked where exploitation is necessary for the proper provision of the full range of services provided by the Commonwealth, State or Territory, as the case may be.
The proposed amendments under the Bill are intended to clarify under what circumstances Crown use provisions can be invoked, and improving government accountability and transparency when invoking Crown use by requiring Ministerial oversight and authorisation of this use, and to provide a clearer remuneration standard for payment to the patent owner or registered design owner.
In order to achieve this, the Bill provides that the relevant government is required to seek a negotiated outcome (for example, a licence) with the patentee or registered owner, except in the event of an emergency.
Where these negotiations are unsuccessful, or in the event of an emergency, Ministerial authorisation must be sought instead, with the patent owner or registered owner notified of the reasons for the Ministers decision if approved.
Following on from the Exposure Draft, new provisions have been included in the Bill which provide that where terms for the use of the patent or design have been negotiated and agreed, those terms must be complied with or else that use will be an infringement of the patent or registered design.
Compulsory licensing provisions
Compulsory licensing is a legislative safeguard in the Patents Act which may be invoked by the Federal Court in exceptional circumstances, allowing another party to exploit an invention without authorisation of the inventor.
Currently, a compulsory order may be sought where the reasonable requirements of the public with respect to a patent have not been satisfied. Throughout the course of its review, the Productivity Commission raised that this term was unduly confusing, and conflated the reasonable requirements of the public with the interests of individual trades or industry.
The Bill replaces references to reasonable requirements of the public with a ‘public interest’ test when the Court considers an application for a compulsory licence. The ‘public interest’ must also be considered when determining the terms of such licence, including the remuneration which will be payable. The intended use of ‘public interest’ is to draw upon existing case law in its interpretation, thus providing clarity and certainty to the term as used in the legislation.
The Bill requires generally that a licence may only be granted where:
- There is unmet demand for an original patented invention, which can be resolved by granting authorisation to exploit;
- The applicant has made reasonable attempts to obtain authorisation from the patentee;
- The patentee has not provided a satisfactory reason for not exploiting the patent; and
- It is in the public interest to grant a compulsory licence.
When deciding if a grant is in the public interest, the courts should have regard to the benefits to the public from meeting the unmet demand, the commercial costs and benefits of a licence to the patentee and the applicant, and any other matters which may arise.
Following on from the Exposure Draft, new provisions have been included in the Bill which refer to the consideration of the unmet demand of a patent which has not been exploited to the extent required to meet such demand, the potential benefit to the public, and the impact on the patentee and applicant in revoking the relevant patent.
The amendments intend to improve the balance between individual rights of patent owners and the interests of the general public.
We await further consideration of the Bill by Parliament.
This article was written by Ashley Holland, Partner and Sarah Romanous, Associate.