Greens Move to ‘Simplify’ Government Compulsory Licensing

The Australian Patents Act 1990 includes somewhat quaintly-titled ‘Crown Use’ provisions.  These essentially provide the government with the power to compulsorily acquire a licence to use a patented invention in the course of providing services to the public.

People in some parts of the world regard such compulsory acquisition provisions as an unconscionable imposition on the rights of a patent holder.  Yet Crown Use provisions have always been a part of the Australian patent laws.  Patent monopolies exist only as a result of legislation enacted by the Commonwealth, and it is understandable that the government might not want to place that kind of power in private hands without including some mechanism to avoid being held to ransom by a patentee.

Ultimately, this is about balancing the private interests of the patent owner with the public interest in ensuring that the government is not locked out from affordable access to new technologies in appropriate cases.

In practice, however, the Crown Use provisions have rarely been invoked and, when they have, it has generally been in the context of asserting a defence to infringement rather than in a pre-emptive effort to acquire a licence prior to exploiting a patented invention (see, e.g., Stack & GS Technology Pty Ltd v Brisbane City Council [1995] FCA 1427).

Changes to the Australian Crown Use provisions were recommended in the Productivity Commission Inquiry Report into the Compulsory Licensing of Patents.  The recommended changes were included in the Intellectual Property Laws Amendment Bill 2013, which passed in the House of Representatives despite a lack of support by the then-opposition Liberal-National Party coalition, but which failed to make it through the Senate before a general election was called (see Election Stalls Further Patent Law Reform in Australia).

When the amendments were reintroduced to parliament this year, as the Intellectual Property Laws Amendment Bill 2014, the changes to Crown Use that previously lacked opposition support had been excised.  Given this lack of support, I was surprised to see that when the Bill was debated in the House of Representatives (on 24 November 2014) the Greens’ Adam Bandt presented a proposed amendment which would have reintroduced the amendments to the Crown Use provisions, albeit in a slightly watered-down form.  So far, these proposed amendments have been rejected, but they may take on new life when the Bill is considered by the Senate.

Purpose and Content of Proposed Amendment

In his Second Reading speech, Bandt argued that while the Bill is intended to ‘advance and promote the innovation system’ it ‘fails to grapple with the other side of the equation—that is, what we do about making sure the cures, research and technology are available to everyone?’  He made the very sound point that, while the Crown Use provisions have always been available to enable the government to obtain access to a patented invention where necessary, a lack of clarity around the circumstances in which the provisions apply and the procedure for their invocation have contributed to the lack of use.

This is, in fact, exactly what the Productivity Commission found in its inquiry, recommending that the Patents Act be amended to ‘make it clear that Crown use can be invoked for the provision of a service that the Australian, State and/or Territory Governments have the primary responsibility for providing or funding’, and that it should specify a procedure for invoking Crown Use, as follows:

1. the Crown to attempt to negotiate use of the patented invention prior to invoking Crown use;
2. the Crown to provide the patentee with a statement of reasons no less than 14 days before such use occurs; and
3. Crown use to be approved by a Minister (the relevant Federal Minister or State Attorneys-General).

These elements of the Productivity Commission’s recommendations were reflected in the Bandt amendments.  However, two further recommendations – that the Act should explicitly state that ‘in instances of Crown use, the patentee is entitled to remuneration determined on the same basis as that for a compulsory licence’, and that the first two requirements of the above process may be waived in the case of an emergency – were excluded.

Government Rejection

Unsurprisingly, given the history of these proposed amendments to the Crown Use provisions, the Greens’ attempt to reintroduce them was quickly shot down.  Indeed, in rejecting the proposed amendments, the Parliamentary Secretary to the Minister for Industry, Bob Baldwin, was (perhaps predictably) scathing in his criticism of Bandt:

We will not accept these amendments on this basis. There is no consultation. The reason they were rejected in the original bill was a lack of consultation with industry in particular. If you want a bill like this to succeed, the member for Melbourne should perhaps detail to the House how much industry consultation he has actually performed before moving this amendment.

I think it is incumbent on people when they move amendments that they do it on a basis of fact and engagement with stakeholders so that there is some substantial effort and understanding of what they are trying to achieve. I am not saying that crown-use provisions are bad. But as was outlined when the bill was originally introduced by the former government, there had not been enough stakeholder engagement. There was a negative reaction from industry that needed to be overcome. Through the processes of time, we will look at crown-use provisions into the future, but not just now.

This is rushed. The first I heard about an intention to move these amendments was here tonight when I walked into the chamber. I would have thought that if you wanted to get an amendment like this up, rather than do a bit of grandstanding, one might have come and seen the government and put forward the case, the need and the reason. So we will be rejecting these amendments.

For those interested in the details of the Greens’ failed proposal, I have prepared a copy of the Bill incorporating the Greens’ amendments in redline mark-up.  (If you are tracking the progress of the Bill, I also previously prepared a marked-up copy showing the differences between the version of the Bill originally introduced to parliament and IP Australia’s exposure draft.  My earlier document showing the changes between the 2013 version of the Bill and the exposure draft is also still available.)

Next Stop – Senate Debate

This saga may not yet be over, however.  The Bill has now moved to the Senate where the Greens, in combination with a number of independent and minor-party senators, hold the balance of power.  With the Labor opposition potentially supporting changes to Crown Use, and the cross-bench senators proving themselves to be an unpredictable group, it is not inconceivable that the Greens might be successful in moving these same amendments in the Senate.

If this were to happen, the Government would then have to decide whether to abandon its opposition to the amendments in order to achieve agreement between the Senate and the House of Representatives so that the Bill as a whole could pass or, alternatively, to continue to fight for passage of the Bill in unamended form.

Either way, expeditious passage of the Bill is now far from guaranteed.  The second reading of the Bill was moved in the Senate on 25 November 2014, meaning that it is not ripe for further debate and possible amendment.  The Senate sits for the first time next year in the week commencing 9 February 2015, and it will be interesting to see what happens next!

Tags: Australia, Compulsory license, Crown use, Law reform, Legislation