12 Apr 2012

Faster, higher, stronger - patent law reform in an Olympic year: Part 2

by Richard Hoad, Deborah Polites

Changes to patents law bring new exemptions to infringement for experimental and regulatory activities and a much more powerful right to seek non-infringement declarations.

This article focuses on other significant changes to the patent system, including new exemptions to infringement for experimental and regulatory activities and a much more powerful right to seek non-infringement declarations.

Experimental use exemption

After much debate over recent years, the Bill introduces an exemption to patent infringement for acts solely done for the purposes of research. This will be a welcome development for universities, research organisations and academics.

Although it has sometimes been considered that the common law in Australia already provides this exemption, its existence and scope have been uncertain. Courts in the United States placed a very narrow interpretation on the experimental use defence in that country, and the same might have been expected in a similar case in Australia, even if a court confirmed that there was such a defence at common law.

Although the practical scope of the exemption will still be determined when the legislation is tested in the courts, enshrining it in legislation will provide a basic level of protection for researchers and remove any disincentive that may have existed for research to be conducted in Australia, including in key areas such as gene technology.

Broadening the regulatory approval exemption

Under the existing law, generic pharmaceutical companies may undertake activities which would otherwise infringe a patent, provided the sole purpose is to obtain regulatory approval in Australia or overseas. This is designed to allow a generic competitor to take the steps required to place itself in a position to launch a product as quickly as possible after the relevant patent expires. The rationale was that otherwise the regulatory approval process would operate as a de facto extension of the patent term.

However, the existing exemption was restricted to pharmaceutical substances. Producers of other products that require regulatory approval, such as medical devices, agricultural and veterinary chemicals and industrial chemicals, currently cannot lawfully use a patented invention for the purpose of applying for regulatory approvals prior to patent expiry.

The Bill introduces a new exemption which is neutral as to the nature of the technology or the approval process involved. An act will not infringe a patent where it is done "solely for purposes connected with" obtaining a regulatory approval (whether that approval is required under Australian law or the law of any other country).

This exception will enable generic companies in fields other than pharmaceuticals to obtain regulatory approval before the expiry of a patent, so that they can be in a position to bring products to market as soon as the relevant patent has expired. This encourages generic companies to conduct preparatory work in Australia which would otherwise have been done overseas in order to avoid patent infringement.

Grace period extended to secret commercial use

Certain publications and uses by or on behalf of the patentee during the 12 months before the priority date are disregarded in assessing whether an invention is novel or involves an inventive step (or, in the case of an innovation patent, an innovative step).[1] This means that, at present, public use by the patentee during that 12 month period will not invalidate a patent. The Bill extends the 12 month grace period to secret uses of an invention.

Non-infringement declarations

The law currently allows a person to apply for a declaration that certain activities will not infringe a claim of a patent. This avenue is very rarely used, principally because the applicant needs to pay the patentee’s legal costs, regardless of whether the applicant is successful or not.

The Bill introduces the following changes:

  • a person who has done or proposes to do an act will be able to apply for a declaration that doing so does not (or would not) infringe a patent – clarifying that the declaration can relate to past, present or intended future conduct;
  • an application for a non-infringement declaration will only be able to be made in relation to a standard patent which has been granted or an innovation patent which has been certified (contrary to existing Federal Court authority);
  • a person applying for a non-infringement declaration will be able to challenge the validity of the patent in the same proceedings; and
  • the court will be able to make any order as to costs, which in practice is likely to mean (as is the usual course in Australia) that the unsuccessful party will pay a proportion of the successful party’s legal costs.

This is likely to make non-infringement declarations a far more viable option for companies concerned that proposed new products or processes may infringe a third party patent.

Entitlement to patent grant

The Bill introduces changes clarifying the procedures for dealing with disputes about who is entitled to the grant of a patent. It also provides that a patent will not be invalid merely because the patent was granted to someone who was not, in fact, entitled to the grant. While revocation may be the outcome in rare cases, it is intended that, in the ordinary course, rectification of the Register to correctly record entitlement would be the more appropriate outcome.

Restrictions on divisional applications

There has been concern expressed at the increasing use of divisional applications, particularly late in the application process. Currently it is possible to file divisional applications at any time until grant. The Bill is intended to limit the ability to file divisional applications to the period up to the end of the time for the filing of an opposition to the parent application.

[1] It has been doubted whether the law the grace period only provides protection in relation to novelty, and not inventive (or innovative) step. The Bill clarifies that information made publicly available in the 12 month period is disregarded for the purposes of both novelty and inventive (or innovative) step.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.