[Ip-health] Changes in Australia Compulsory licensing laws

James Love james.love at keionline.org
Thu Aug 15 05:45:55 PDT 2019


Australian Patent Update: three key changes underway
Herbert Smith Freehills LLP
Australia August 15 2019


Crown use of patents and designs

Crown use sets out the circumstances in which the Australian Federal, State
and Territory governments can access and use patented technology and
registered designs without the prior authorisation of the patent applicant,
the patentee, or in the case of registered designs, the registered owner.

Responding to observations of the Productivity Commission that the current
Crown use provisions were unclear and failed to sufficiently provide for
transparency and accountability, the Bill expands Crown use so it can be
invoked for the provision of services for which any Commonwealth, State or
Territory government has the primary responsibility for providing or

When determining ‘primary responsibility’ all providers of similar services
to those provided or funded by a government, including non-government
providers, are to be included in the assessment.

The explanatory memorandum gives the example of diagnostic genetic testing,
which is invariably undertaken by private providers, but the government’s
responsibility for and funding of the vast majority of genetic testing
means it fulfils the ‘primary responsibility’ test.1

The Bill’s amendments:

clarify that for the Crown’s exploitation to be valid, the government must
have attempted to negotiate with the patent owner “for a reasonable period”
for an authorisation to exploit the invention (for example under a
licence), and have the relevant Minister’s approval;2
require prior notice to be given to the patent applicant or patentee at
least 14 days before the exploitation commences (except in emergency
provide that only in an emergency is a negotiation not required. An
emergency could include a public health crisis such as a plague or
epidemic, or pandemic. It could also include war, national security
situations, perceived threats to law and order, natural disasters and other
situations of urgency;4 and
change the remuneration provision so that the Court is now required to
determine 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”, rather than merely taking into account any
compensation received.5
Compulsory licenses

A compulsory licence is an order made by the Court for a patentee to grant
a licence to another party to exploit an invention. In its inquiry, the
Productivity Commission found that the current compulsory licence
provisions were unclear and suggested reform to improve the certainty and
clarity of the legislation.

The Bill’s amendments implement a stricter and more certain framework for
compulsory licences and require the Court to only make an order for a
compulsory licence where:

there is an unmet demand in Australia for an original patented invention;
the patent holder has failed to exploit the patent and provide reasons for
this; and
the applicant has attempted for a reasonable period to obtain a licence on
reasonable terms and conditions, but without success.
In addition to these factors, the Court must be satisfied that the grant of
the licence is within the ‘public interest’. This replaces the existing
‘reasonable requirements of the public’ test and should please patent
owners as it is likely to be comparable to the public interest requirements
in other areas of law.

The amendments require the Court to consider three factors in its
assessment of whether a compulsory licence is in the ‘public interest’:

the benefits to the public from meeting the relevant unmet demand for the
original patented invention;
the commercial costs and benefits to the patentee and the applicant; and
any other matters that the Court considers relevant, including those
relating to greater competition and any impact on innovation.
Similarly to the amendments to determining remuneration for Crown use, the
Bill has amended the method by which remuneration for compulsory licences
is to be determined (by agreement or Court determination) and expanded the
factors that the Court must take into account to include:

“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 the efficient exploitation of the invention.”

James Love.  Knowledge Ecology International
U.S. Mobile +1.202.361.3040
U.S. office phone +1.202.332.2670
http://www.keionline.org <http://www.keionline.org/donate.html>

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