There are also infringement exemptions in section 118 and section 119 covering, respectively, use of patented technology on vessels in transit, and prior use – i.e. where someone other than the patentee was already using an invention in secret and without making an anticipating public disclosure, prior to the patentee filing a patent application.
IP Australia’s proposed reforms include new exemptions covering acts for obtaining regulatory approval of goods other than pharmaceuticals, and acts conducted for ‘experimental purposes’.
NON-PHARMACEUTICAL REGULATORY APPROVALProposed new section 119B of the Draft Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 is intended to extend the existing regulatory approval exemption to encompass otherwise infringing acts relating to obtaining government approval for goods (or, presumably, services) other than pharmaceutical products under section 119A.
It is not intended that the proposed provision be limited to acts associated with obtaining registration on the ARTG, or even to obtaining regulatory approval in Australia. The section would provide an exemption for ‘(a) purposes connected with obtaining an approval required by a law of the Commonwealth or of a State or Territory to exploit a product, method or process; or (b) purposes connected with obtaining a similar approval under a law of another country or region’. As stated in the Draft Explanatory Memorandum:
… pharmaceutical patents are not the only type of patentable product where pre-market regulatory approval is required. For example agricultural chemicals and certain medical devices require regulatory approval. There is no reason in principle why non-pharmaceutical technologies should be treated differently and why patentees in non-pharmaceutical technologies should be afforded a de facto extension of term.
The equivalent provision in the existing section 119A employs similar wording, and to our knowledge has been largely uncontroversial (the same cannot necessarily be said for provisions associated with pharmaceutical patent extensions of term, but that is not relevant here).
‘EXPERIMENTAL USE’ EXEMPTIONThere has never been, in Australia, a statutory exemption, or defence to infringement of a patent, on the basis of ‘experimental use’. It seems to be widely believed (although we are not entirely sure why) that there may be some form of common law defence in cases in which there is no direct commercial benefit or intent on the part of the alleged infringer. In reality, it would be more accurate to say that there has been no instance of any party being sued for an ostensibly non-commercial use of patented technology, not least because there is barely any incentive to do so. While a court might issue an injunction, and award costs against an unsuccessful party, there is little prospect of an award of damages, or an account of profits, in a cases where there has been neither damage, nor profit!
Nonetheless, as has been pointed out before (not least by the Advisory Council of Intellectual Property (ACIP), in its report on Patents and Experimental Use, October 2005), the lack of any statutory provision, or relevant court decision, leads to uncertainty that may be impeding progress or incurring unnecessary costs, in various fields of research.
IP Australia is therefore proposing an experimental use exception based upon wording appearing in subsection 60(5) the UK Patents Act 1977. Proposed subsection 119C(1) stipulates that:
A person may, without infringing a patent for an invention, do an act that would infringe the patent apart from this subsection, if the act is done for experimental purposes relating to the subject matter of the invention.
The Draft Explanatory Memorandum states that:
It is intended that ‘experimental’ be given its ordinary English meaning. The exemption should apply to tests, trials and procedures that a researcher or follow-on innovator undertakes as part of discovering new information or testing a principle or supposition.
The intent is, further, that the ‘new information’, ‘principle’ or ‘supposition’ should relate to the ‘subject matter of the invention’. In other words, the intention is that an exemption to infringement exists in respect of experiments performed ‘on’ the invention, as opposed to experiments performed ‘with’ the invention (for example, where the patented invention comprises test or measurement apparatus).
It is a concern that a provision in identical terms in the UK law has been construed narrowly by the courts. As noted in the ACIP report on Patents and Experimental Use:
The UK courts have provided some guidance on what is meant by “experiment/experimental”. In [Monsanto v Stauffer  RPC 15] the Court of Appeal imposed a limitation according to size, scale, recipient and methodology of the experiment but also according to whether it seeks to generate genuinely new information or if it merely seeks to verify existing knowledge. …
The same court in SK&F v Evans  FSR 513 also interpreted the phrase “relating to the subject matter of the invention” narrowly to mean “in the sense of having a real and direct connection with that subject matter”.
A  study of the UK biotechnology industry and public research sector for the Department of Trade and Industry states “there is evident uncertainty … about the extent of the patent research exemption, which is widely seen as problematic”. The study concludes that more investigation of the problem is needed in the UK.
The ‘solution’ proposed by IP Australia (without expressly acknowledging the problem) is to include in the proposed legislation a non-exhaustive list of activities that are deemed to be experimental, viz:
- determining the properties of the invention;
- determining the scope of a claim relating to the invention;
- improving or modifying the invention;
- determining the validity of the patent or of a claim relating to the invention;
- determining whether the patent for the invention has been infringed.
The exemption is not intended to apply only to circumstances where activities are undertaken solely for experimental purposes. This would ignore the reality of the current research environment, where research is frequently undertaken for mixed purposes.
… the exemption should apply as long as the specific acts are undertaken for the predominant purpose of gaining new knowledge, or testing a principle or supposition about the invention. Thus if an activity is conducted primarily for the purpose of improving a patented invention, the activity would still be exempt, even if the person also had in mind commercialising the improvement in the future.
We do not see this reflected in the proposed wording based on the UK Act, nor does it appear to necessarily fall within any of the deemed categories of experimental use. For example, if a researcher is seeking to improve or modify some other device (whether patented or not) by incorporating a patented invention, would this constitute an experimental use of the invention? Perhaps, as in the UK example, it would depend upon the ‘size, scale, recipient and methodology of the experiment’. So where is the elimination of uncertainty?
THE VERDICTWe are supportive of the proposed provision to exempt from infringement acts performed for the purposes of obtaining regulatory approval. The public is entitled to the benefits of potential competition and choice from the day a patent expires, and other legislative and regulatory considerations should not be allowed to act as a barrier to this.
We are also in favour of researchers being free to conduct legitimate experimental and innovation activities without fear of being sued for patent infringement. However, so long as the line between ‘predominantly experimental’ and ‘predominantly commercial’ purposes remains unclear, there will inevitably be uncertainty. A similar provision in the UK is recognised to have problems, and we are therefore not convinced that IP Australia has got this right.
Perhaps a statutory experimental use exclusion is not required. It is possible that the best indicator of when a use crosses the line from ‘experimental’ to ‘commercial’ is the point at which it becomes worthwhile for the patentee to commence legal action. Considering that this appears to be the current status quo, it is possible that the proposed reform will make no practical difference. Of course, the corollary to this is that enacting the proposed provision would have no obvious adverse effect, so why not go ahead and (hopefully) silence all those who have been calling for such a provision for many years.