Bar Raised, as IP Law Reforms Signed Into Law

Last Sunday, 15 April 2012, the Governor General of Australia, Ms Quentin Bryce AC CVO, signed into law the Intellectual Property Amendment (Raising the Bar) Act.

The majority of amendments to Australia’s intellectual property laws do not come into effect for another year, i.e. on 15 April 2013.  We have covered most of the major changes affecting patents in a number of previous articles (see, e.g., ‘Raising the Bar’ Moves Another Step Closer to Law, Major Australian Patent Reform Passes in Senate, Australian Patent Reform – Wrap-Up.) 

No doubt we will return to these provisions over the coming months, particularly with accompanying amendments to the regulations yet to be drafted.  IP Australia is promising that it will soon release draft regulations for public comment, ‘covering important aspects of the Act’s implementation including a shorter time period for examination, and other procedural changes for patents.’

There are, however, two changes which came into effect immediately the Act was signed into law.  These are new exemptions (i.e. defences) from patent infringement in specific circumstances:

1. use of a patented invention in satisfying regulatory requirements for non-pharmaceutical products; and
2. use of a patented invention for experimental purposes.

REGULATORY USE EXEMPTION

New section 119B of the Patents Act 1990 provides that:

A person may, without infringing a patent, do an act that would infringe the patent apart from this subsection, if the act is done solely for:

1. 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
2. purposes connected with obtaining a similar approval under a law of another country or region.

This section does not apply in relation to a pharmaceutical patent within the meaning of subsection 119A(3).

An exemption for regulatory use in relation to pharmaceutical products has been present in section 119A since 1998, so the effect of this new provision is to extend this defence to other circumstances in which regulatory approval is required before a product may be placed on the market.

The purpose of regulatory use exemptions to infringement is to ensure that competitors are able to make the necessary preparations to bring a product to market as soon as a patent expires.  Without such provisions, the patentee obtains an effective patent term ‘extension’ for the duration of the time required for other companies to obtain approval before they can start selling competing products.

The exemption does not limit the type of regulatory approval for which it may be used, other than the fact that it must be ‘required by a law’ in Australia, or a similar legal requirement of another territory.  It covers not only any existing regulatory requirements, but also any which may be imposed in the future.
 
The new defence applies only for the purposes of seeking regulatory approval.  It does not, for example, permit a person to manufacture and store a patented product prior to expiry of the patent, for later sale, or to manufacture a product for export to another country.

EXPERIMENTAL USE EXEMPTION

New section 119C of the Patents Act 1990 provides that:

(1) 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.

(2) For the purposes of this section, experimental purposes relating to the subject matter of the invention include, but are not limited to, the following:

(a) determining the properties of the invention;
(b) determining the scope of a claim relating to the invention;
(c) improving or modifying the invention;
(d) determining the validity of the patent or of a claim relating to the invention;
(e) determining whether the patent for the invention would be, or has been, infringed by the doing of an act.

The intention of this provision is to exempt from infringement activities involving experiments or research on a patented invention, but not to permit experiments or research merely involving use of a patented invention.

For example, if a patent covers a technique for analysing a biological sample, it would not be an infringement to experiment with the technique for purposes such as confirming that it works, or for making improvements to it.  However, it will still be an infringement to use the patented technique for analysis of new biological samples, even if this is being done for research or experimental purposes in relation to properties or composition of the samples.

The list of examples of ‘experimental purposes’ in subsection (2) is not intended to be exhaustive.  The courts are permitted plenty of scope to interpret the words ‘experimental’ and ‘relating to the subject matter of the invention’.

Paved with good intentions…

There is much that is ‘intended’ to be the case, but which is not expressly set out in the new provision.  The Explanatory Memorandum discusses this intent at some length:

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 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.

For example:

1. a researcher may be contracted and paid to undertake experiments;
2. research may be conducted with a view to ultimately commercialising the end-products of the experimentation; and
3. research may be undertaken with, and partially funded by, a commercial partner.

In each of these circumstances 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.

However, the exemption is not intended to apply where the main purpose of the acts is to commercialise the invention, or to manufacture it for the purpose of sale or use for commercial purposes. Additionally,‘market research’ on a patented invention (e.g. making and using the invention to test the likely commercial demand for a product) is not intended to be exempt. This too has a predominantly commercial purpose.

The amendment requires that the experiments be ‘related to’ the patented invention. This choice of words is intended to achieve two ends.

First, it is intended to cover circumstances where experiments inherently include the subject matter of a patent, perhaps as part of a larger or more complex experiment, but the researcher is unaware of the existence of the patent. This is consistent with the policy objective of freeing researchers to innovate. Researchers should not have to conduct extensive patent searches before starting every experiment.

Secondly, it is not intended to exempt the use of patented ‘research tools’ from infringement. A ‘research tool’ is something that is used to facilitate an experiment, rather than something that is the subject of the experiment. …

Research tools are often used exclusively or primarily in research. If the experimental use exemption were to apply to such tools it would substantially diminish the economic incentive to develop better research tools.

Under section 15AB of the Acts Interpretation Act 1901, a court is permitted to consider extrinsic materials, such as explanatory memoranda, where those materials are ‘capable of assisting in the ascertainment of the meaning of the provision’.

CONCLUSION

The new infringement exemptions apply to acts which are committed on or after the day the provisions became law. 

It is therefore still possible for a patentee to sue for infringement which may have taken place before 15 April 2012, even if the acts in question would now be exempt.

But anybody now commencing work towards obtaining regulatory approval, or for purposes of genuine research or experiment in relation to a patented invention, enjoys the benefit of these new provisions.

Tags: Australia, Experimental use defence, Law reform, Patent law, Raising the Bar, Regulatory use defence