Productivity Commission: is the compulsory patent licensing system working?

Productivity Commission: is the compulsory patent licensing system working?

Productivity Commission: is the compulsory patent licensing system working?

On 9 August 2012, the Productivity Commission released an Issues Paper outlining the scope of its inquiry into the compulsory licensing provisions of the Patents Act 1990 (Cth) and calling for submissions from interested parties.1

The Federal Government’s Terms of Reference require the Commission to:

  • assess whether the current provisions for the compulsory licensing of patents can be invoked efficiently and effectively;
  • recommend any measures to ensure that the compulsory licensing mechanisms can be efficiently and effectively utilised in a manner consistent with Australia’s international obligations; and
  • recommend any alternative mechanisms to ensure that the balance between the incentives to innovate and access to technology best reflects the objectives of reasonable access to healthcare solutions, maximising economic growth and growing the Australian manufacturing industry.

Currently, the compulsory licensing provisions of the Patents Act allow a person to apply to the Federal Court for an order requiring a patentee to grant the applicant a licence to “work” a patented invention.2 An applicant must, however, meet either a public interest or competition test in order to be granted a compulsory licence under those provisions and must pay the licensor compensation for the granted rights. To date, only two cases have specifically considered an application for a compulsory licence under these provisions and in both cases a compulsory licence was refused.3

The Productivity Commission’s inquiry comes after and in the context of the Federal Government’s recent reforms to the Patents Act4 and announcement that it will introduce legislation to enable courts to grant compulsory licences to manufacture and export pharmaceuticals to countries dealing with epidemics and other health crises, as a result of Australia’s accession to the Doha Declaration on the TRIPS Agreement and Public Health. The Terms of Reference also expressly direct the Commission to consider the broader relevance of compulsory licensing, including in the context of gene patents and healthcare, climate change mitigation and alternative energy technologies, food security5 and standard essential patents.6

The Commission invites interested parties to prepare submissions on the issues raised in the Issues Paper. Submissions are due by 28 September 2012. Details on how to make a submission are set out on the Productivity Commission’s website.


  1. Australian Productivity Commission 2012, Compulsory Licensing of Patents: Issues Paper [Canberra]
  2. See sections 133 to 140 of the Patents Act.
  3. See Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation (1969) 119 CLR 572 and Wissen Pty Ltd v Kenneth Mervyn Lown (1987) 9 IPR 124.
  4. Including as a result of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 which aims to raise the standard of patents granted in Australia and which includes express exceptions to patent infringement for research and experimentation purposes.
  5. On 17 July 2012, the Federal Government released its National Food Plan green paper, the next step towards the Government’s development of a National Food Plan to ensure food security in the future.
  6. Standard essential patents are currently the subject of the high-profile litigation between Apple and Samsung in relation to standard technologies incorporated into 3G telecommunications.