Time for a change to Australian Intellectual Property Laws?

Time for a change to Australian Intellectual Property Laws?

On 30 March, 2006 the Intellectual Property Laws Amendment Bill 2006 (Cth) (“the Bill”) was introduced into the House of Representatives. The Bill proposes to make some significant amendments to the Patents Act 1990 (including amendments to clarify the prior use defence, to add another ground upon which a compulsory licence may be sought, to allow the award of exemplary damages and which affect the ability to “springboard” on pharmaceutical patents), and to the Trade Marks Act 1995 (including amendments which affect the revocation of trade mark rights and access to trade mark documents filed with the Trade Marks Office). The Bill proposes other, less substantive, amendments to the Designs Act 2003, The Plant Breeder’s Rights Act 1994 and the Olympic Insignia Protection Act 1987. The primary amendments are outlined below.

Proposed amendments to the Patents Act 1990

The proposed amendments to the Patents Act 1990 (Cth) (“the Patents Act”) in the Bill will impact five areas of patent law:

  • Prior use as a defence to infringement;
  • Compulsory licensing;
  • “Springboarding” on pharmaceutical patents;
  • Damages for infringement; and
  • Innovation patents.

Prior Use as a Defence to Infringement

Section 119 of the Patents Act provides a limited non-assignable defence to infringement where a third party can show that they had been secretly using the invention or had taken definite steps to use the invention anywhere in the world before the priority date of the patent. This seldom used defence was intended to balance the rights of the third party against the rights of the patentee. The proposed amendments affect the application of the defence in three ways:

  1. the third party must be exploiting or taking steps to exploit the product, method or process in Australia before the priority date of the patent. Third parties secretly exploiting an invention in another jurisdiction will not be entitled to rely on the section 119 defence.
  2. the third party will be able to assign the entitlement to rely on the prior use defence to another party for example, for the purpose of commercialisation, without having to sell its business. However, the right to rely on the defence cannot be licensed to another party.
  3. where a third party who is making a product that is the subject of a patent, or has taken definite steps to make such a product, before the patentee applied for the patent, the third party may not only continue to make the product but may also exploit the product in other ways; for example, by selling the product. It may also allow the third party to exploit other products, or use other processes covered by the patent without infringing the patent.

Compulsory Licensing

Section 133 of the Patents Act currently provides that a prescribed Court may order a patentee to grant a licence to its patented invention where the reasonable requirements of the public have not been satisfied by the exploitation of the patented invention by the patentee.

The proposed amendments provide a further circumstance in which a compulsory licence may be granted where the patentee is engaging in conduct which would contravene Part IV of the Trade Practices Act 1974 (Cth) in connection with the patent.

If the amendment becomes law, the effect of the amendment will be to strike at:

  1. refusals to licence which constitute the use of substantial market power for the purpose of damaging a competitor, preventing a competitor from engaging in competitive conduct or preventing a competitor from entering a market;
  2. refusals to deal which are the result of an understanding with a competitor that certain persons, classes of persons, or persons or classes of persons in particular places will not be licensed;
  3. refusals to licence except on condition that the licensee acquires other goods or services from a third party; and
  4. refusals to licence except on the condition that the licensee acquires other goods or services from the patentee where there is an intent or a likelihood that competition in a relevant market will be substantially lessened.

The Government has also foreshadowed amendments being made to the Trade Practices Act and, in particular, to Section 51(3) of the Act. That section provides a safe harbour for conditions in licences and assignments to the extent that they relate to the invention to which the patent relates or articles made by the use of that invention. The Government’s stated intention is to replace that safe harbour with one which protects the exploitation of intellectual property rights (including patents) except where the result is likely to be a substantial lessening of competition in a relevant market. Until the Government releases an exposure draft of the proposed amendment, it is not possible to say whether the proposed safe harbour will cover refusals to licence or whether refusals to licence will remain subject to the absolute prohibitions in the Trade Practices Act which are detailed in 1, 2 and 3 above.

The amendments also propose to give the Federal Court exclusive jurisdiction to hear applications for compulsory licences as this Court is considered to have expertise in both patent law and competition law.

Springboarding on Pharmaceutical Patents

The Patents Act contains a limited provision that allows a generic pharmaceutical manufacturer to undertake the activities necessary to gain regulatory approval for a patented pharmaceutical in Australia and overseas without infringing the patent. The provision currently only allows such activities (known as “springboarding”) in relation to patented pharmaceuticals that have been granted an extension of patent term, and the infringement exemption only applies to the extended patent itself and not to other patents that may be infringed by the springboarding activities.

The proposed amendments extend the provision to allow springboarding on any pharmaceutical patent, at any time, for purposes relating to generation of information required to support an application for regulatory approval of a pharmaceutical product in Australia or another territory. However, if regulatory approval is sought in a territory other than Australia, the pharmaceutical product cannot be exported from Australia for regulatory purposes unless the patent for the product has been granted an extension of term.

These amendments are intended to bring Australia’s springboarding provisions closer to those in other jurisdictions such as the United States, Canada and New Zealand and those proposed in Europe. If implemented, the new provision will be retrospective and will apply to all patents in force at the time, or after, the commencement of the amendment.

Damages for Infringement

Where patent infringement is found, a court may currently award either ordinary compensatory damages or at the patentee’s option, an account of profits. The proposed amendments provide that a court may also award exemplary damages. The factors the court must consider in determining whether exemplary damages are appropriate are:

  • the flagrancy of the infringement; and
  • the need to deter similar infringements of patents; and
  • the conduct of the party that infringed the patent that occurred (i) after the act constituting infringement and (ii) after the party was informed that it had allegedly infringed the patent; and
  • any benefit shown to have accrued to the party because of the infringement; and
  • all other relevant matters.

This amendment introduces the possibility of considerable damages being awarded against a party that wilfully infringes a patent. Similar provisions exist under section 115(4) of the Copyright Act 1968 (Cth).

Exemplary damages will only be available for infringements occurring after the amendments come into force.

Innovation Patents

Amendments have also been proposed which relate specifically to innovation patents. The first proposed amendment introduces a requirement that the claims of an innovation patent must define the invention. The second proposed amendment provides that a divisional application for an innovation patent may only be made during the period starting when examination of the first patent begins and ending when the first patent ends, ceases or is revoked, or ending at a period prescribed by the regulations.

At this time no amendments to the regulations have been proposed. It is therefore not clear whether further limitations may be placed on the period in which a divisional application of an innovation patent may be filed.

Proposed amendments to the Trade Marks Act

The most significant amendments to the Trade Marks Act 1995 (Cth) (“the Trade Marks Act”) increase the powers of the Registrar of Trade Marks (“the Registrar”) by:

  • broadening the grounds on which the Registrar may revoke acceptance of a trade mark application;
  • granting the Registrar power to revoke trade mark registrations; and
  • granting the Registrar the power to make documents available for public inspection.

Other amendments include:

  • changes to rules and procedures regarding Certification Trade Marks;
  • clarification on consequences of failure to pay fees; and
  • procedural clarification on days on which the Australian Trade Marks Office are deemed to be open for the purpose of lodgment of documents.

Revocation of Acceptance

Currently under the Trade Marks Act, acceptance of a trade mark application can only be revoked if the Registrar is satisfied that either:

  • an error or omission occurred during examination; or
  • special circumstances exist.

The Bill broadens the circumstances in which the Registrar may revoke acceptance of an application. Under the Bill, acceptance of an application may be revoked if the Registrar is satisfied:

  1. the application should not have been accepted, taking account of all of the circumstances that existed when the application was accepted (whether or not the registrar knew of their existence); and
  2. it is reasonable to revoke the acceptance, taking account all of the circumstances.

The Bill broadens the circumstances in which the Registrar may revoke acceptance of an application. Under the Bill, acceptance of an application may be revoked if the Registrar is satisfied:

  1. the application should not have been accepted, taking account of all of the circumstances that existed when the application was accepted (whether or not the registrar knew of their existence); and
  2. it is reasonable to revoke the acceptance, taking account all of the circumstances.

This section will be retrospective and therefore apply to applications accepted before and after the commencement of the amendment.

Revocation of Registration

Currently under the Act, only the Federal Court has the power to order the cancellation of a trade mark registration. The Bill also proposes giving the Registrar the power to revoke a trade mark registration for up to 12 months post registration. The circumstances in which the Registrar could revoke registration are twofold:

The Registrar must revoke a registration if an opposition was filed or an application to extend the deadline for filing an opposition was filed and the Registrar failed to take account of the opposition or application and was made aware of this within one month of the opposition or application being filed.

The Registrar may revoke a registration upon application by a third party. In this case, a trade mark registration may be revoked if the Registrar is satisfied that:

  1. the trade mark should not have been registered, taking into account all of the circumstances that existed when the trade mark become registered (whether or not the Registrar knew of their existence); and
  2. it is reasonable to revoke registration, taking into account all of the circumstances.

The circumstances to be taken into account include:

  • errors (including errors of judgement) leading to registration;
  • Australia’s obligations under International agreements;
  • special circumstances;
  • use of the trade mark;
  • legal proceedings relevant to the trade mark;
  • other action in relation to the trade mark.

A practical consequence is that a trade mark registration is therefore vulnerable to revocation for at least 12 months post registration. Also, a third party seeking revocation can now apply both directly to the Federal Court and to the Registrar.

Access to Documents

Currently under the Act, all documents lodged with the Australian Trade Marks Office can only be released for public inspection upon an application filed pursuant to the Freedom of Information Act (Cth). The person who lodged the documents the subject of the request has the opportunity to object to the release of the documents on certain grounds.

The Bill introduces a new section allowing all “prescribed” documents to be made available for public inspection. A document will be “prescribed”, unless the Registrar requires the document to be held confidentially. It is envisaged that all documents in the possession of the Trade Marks Office will be “prescribed”, although this area is currently under review by the Trade Marks Office.

We will continue to closely monitor the progress of the Bill and update you on any further developments.