Experimental use under the microscope

Should there be an express exemption in the Patents Act so that the experimental use of patented inventions is not an infringement of the patent?

A recently released Issues Paperlooks at whether the Act should be amended to clarify the circumstances in which the exploitation of a patented invention for experimental or research purposes is exempted from infringement.

The Advisory Council on Intellectual Property, an independent body which provides advice to the Federal Government on IP policy and administrative issues, is seeking submissions on the Issues Paper by 30 April 2004, and parties interested in taking part in consultations to take place some time in May must register by 31 March.

Australian law on research and experimental use today

The Patents Act does not explicitly set out a general exemption for experimental use of patented inventions. This has led to a debate as to whether this means that no such general exemption exists, or whether there is implicit support for an exemption from the omission to explicitly exclude an experimental use infringement exemption from Australian patent law. This issue remains unresolved in Australia although some of our near neighbours such as New Zealand have recognised the existence of an experimental use exemption.

Though lacking an explicit general exemption for experimental use, the Patents Act does include a specific limited experimental use exemption in relation to pharmaceuticals. Where the owner of a pharmaceutical patent has applied for and been granted an extension of the term of that patent (beyond 20 years), the Act says that the use of a pharmaceutical substance claimed by that patent for a non-therapeutic use or solely for purposes in connection with gaining regulatory approval, either in Australia or overseas, of goods which are intended for therapeutic use is not an infringement of the patent. Thus, this narrow exemption applies only in very limited circumstances.

Policy issues

ACIP has identified a number of discrete policy issues to consider:

• General considerations about the balance between research and development, particularly in relation to any empirical evidence about how experimental use relates to that balance.
• Analogies to copyright, which does contain limited exemption for what is known as "fair use". The major exemption in this regard relates to research or study. ACIP has raised questions about whether a similar regime would be useful in patent law.
• Needs of basic research. ACIP is looking at what motivates researchers, from those seeking pure understanding via basic research through to those seeking commercial application in applied research, as well as researchers motivated by something in between. ACIP questions whether these different strands of research have different needs, and if so, how the patent system can best accommodate those needs. ACIP has also raised questions about whether excessive property rights in patents result in the stifling of innovation, or if the existence of those rights encourage more innovation.
• Biotechnology and medical sciences are a fast-growing field of patent law. Some have claimed that different considerations should be applied for these patents. Some go even further, claiming that within biotechnology, synthetic products should receive a different degree of protection than genes. ACIP asks how these various fields differ, and if there are special issues warranting special treatment under patent law.
• Formulating an "experimental use" exemption to patent infringement is the major goal of the paper. It therefore raises a number of questions about whether such an exemption is required, and, if so, what this exemption should cover.

Alternatives or supplements to an experimental use exemption

Finally, the Issues Paper considers what options may be available. Four specific alternatives are proposed:

• Improved licensing practices by research organisations, making it easier for commercial users to license new technology from researchers.
• Patent pools, where patent owners who deal with each other frequently develop institutions to reduce transaction costs by bundling licences. This is similar to the approach that the music industry takes to copyright.
• Compulsory licensing can already be ordered by a court if a patentee does not reasonably exploit their invention. However, this provision has had no practical effect. ACIP suggests that a possible alternative to an experimental use exemption may be to expand the basis on which such an order can be applied for.
• Open source/public domain mechanisms are suggested by some who believe that there is no need for patent incentives, and that the knowledge should go to the public domain. They point to the example of open source software in copyright law to show such a scheme could work. ACIP asks whether this would be a realistic option in Australia.

Making a submission

ACIP is now seeking written submissions on these issues before 30 April 2004. It is also looking for parties interested in taking part in consultations to take place some time in May. It has asked that any parties interested in taking part notify ACIP by 31 March.

If you wish to read the paper in greater detail, or to look at the specific list of questions proposed by ACIP, the paper can be found at http://www.acip.gov.au/library/patentsexpuse.PDF

If you wish to discuss the issues raised in this paper, or would like help in making a submission, please contact us.