Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download PDFDownload PDF 

Previous Fragment    Next Fragment
Economics Legislation Committee - 28/05/2012 - Estimates - INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO - IP Australia

IP Australia

[9:41]

CHAIR: Do you wish to make an opening statement, Mr Noonan?

Mr Noonan : No.

Senator COLBECK: I just want to quickly run through some follow-on questions about an issue I raised in estimates in October last year. It was around the gathering of information. We had a discussion around that and the circumstance regarding it. Can you tell me exactly where that particular matter is?

Mr Noonan : I think that the designs that were in question were registered by a Mr Odell. I think there were 11 of them that were being challenged by Messrs Bond and Parker. Essentially when we were discussing it last most of those matters were before the Federal Court.

Senator COLBECK: Correct.

Mr Noonan : And the matter that had been bought by Mr Parker—and therefore we were not able to take any further action on those matters ourselves—we understand has been withdrawn from Federal Court proceedings. That is allowing us to consider materials that he might wish to put to us. We have asked him to supply extra information to show that Mr Odell’s designs are not novel and should not have been registered. Sorry, it is Mr Bond that we are dealing with in regard to the potential for re-examination. So we are awaiting information that would enable us to proceed with a re-examination of those matters.

Senator COLBECK: So at this point in time the contested patents are still in force but it is a matter under reconsideration and waiting for further information?

Ms Beattie : I would just like to make a correction. We are not dealing with patents. We are just dealing with design registrations in this instance, and Mr Bond has been able to supply some information to IP Australia staff. This has been done for two of the designs. An adverse or re-examination report has been issued based on this new information. More of the information shown by Mr Bond in a meeting we had with him back in August 2011 is being sought from Mr Bond so that we can look at its relevance in relation to those other design registrations that he is seeking re-examination for.

Senator COLBECK: That is the other nine.

Ms Beattie : Correct.

Senator COLBECK: Have we had any claims in relation to costs on these matters yet?

Ms Beattie : Mr Parker raised a request for reimbursement of costs. We have responded to Mr Parker in relation to that request.

Senator COLBECK: So is that matter finalised?

Ms Beattie : From our perspective it is, but Mr Parker may wish to pursue it further.

Senator COLBECK: So under what basis did he seek costs—any of the particular statutory programs that are available to him?

Ms Beattie : Not that I am aware of. We also noted that there was an option for re-examination before proceeding to the court. As we understand it, he was aware of those provisions but chose to go through the court instead.

Senator COLBECK: Are we talking about challenging the registrations or are we are talking about what potential damages he might have suffered?

Ms Beattie : The re-examination proceedings are available in relation to the registrations. As I said, he had that option available to dispute the registration of those designs through re-examination or alternatively through the courts. He chose the courts avenue.

Senator COLBECK: Okay. That is the action that we talked about in October?

Ms Beattie : I think so.

Senator COLBECK: I will put the rest of my questions on notice. Others have questions.

Senator HEFFERNAN: Two important ‘evergreen’ patents were invalidated only a few weeks ago in the High Court, and I refer to Venlafaxine, the trademarks in EFEXOR XR. The cost of the evergreen patent to the PBS has been estimated at about $150 million. I understand that Pfizer, the patent owner, gave an undertaking to the Federal Court that if the patent were invalidated it would cover the costs to the PBS during the course of the injunction, which was granted in June 2009 and withdrawn in November 2011. The cost for the 29 months is some $35 million. Has IP Australia taken some steps to recover the $35 million from Pfizer? If so, what steps? And if not, why not?

Mr Noonan : This is the Venlafaxine patent you are referring to, Senator?

Senator HEFFERNAN: It is indeed.

Mr Noonan : The question of damage being done to the Commonwealth would be through undue subsidies having been paid under the PBS. That would be a matter for the Department of Health and Ageing. I understand that they are looking at that matter.

Senator HEFFERNAN: Do you recognise the cost of $35 million for the period of the injunction?

Mr Noonan : I do not have any information about that amount.

Senator HEFFERNAN: Does IP Australia plan, in conjunction with other elements of the government, to recover the $150 million that has been overpaid to Pfizer as a result of the evergreening? I mean, this was an extension of an evergreen. The period of the illegal patent protection was over three years. If, yes, what is it planning to do? If not, why not?

Mr Noonan : The question of recovery of moneys would be a question for the Department of Health and Ageing to pursue. What is at issue here is the undertaking that was given at the time of the interlocutory injunctions being obtained in 2009.

Senator HEFFERNAN: A similar injunction was taken out on Clopidogrel, a blood thinner, and the status of its evergreening court action was appealed. There was an undertaking there to make good the costs, which I have raised in other estimates and other parts of this parliament. The real cost over the period of the disqualification is something like between $480 million and $600 million. The cost for the period of the injunction is some $50 million to $60 million. What are we doing about that to recover the costs—to recover the undertaking of the evergreening? This is the new go. As you know, Mr Noonan, this particular evergreening was the second evergreening application. It is a nice little lurk that these people have put in place to avoid cheaper pharmaceuticals for the Australian public, at great cost to the Australian taxpayer. So what are we doing about Clopidogrel?

Mr Noonan : Senator, it might help if I give some background to this one. The original examination of the Clopidogrel patent was in 1989. At that time, due to the legislation that was in force, examiners did not have the power to object to an application on the basis that the claims lacked an inventive step. It was on that basis that in September 2009 the full court of the Federal Court found that the relevant claim in the patent lacked an inventive step. So the passage of the Patents Act 1990 enables examiners now to examine inventive step. Of course, the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 aligns the substantive grounds for examiners with the powers of the court.

Senator HEFFERNAN: The raising the bar bill does not deal directly with this issue, does it?

Mr Noonan : By enabling examiners to look at the same grounds that the court is able to look at, it does address this kind of issue. For instance—

Senator HEFFERNAN: It doesn’t address this issue, though. 'This kind of issue' is a way of getting around the issue of the particular.

Mr Noonan : Well, one of the other requirements for patenting is utility. Until the raising the bar bill comes into operation, it remains the case that examiners do not examine for utility, but it can be a ground for revocation by the courts. So the raising the bar bill aligns the grounds throughout the process—examination, re-examination, revocation and proceeding. So it would avoid this situation where the court is able to revoke a patent on the grounds that an examiner was not able to consider at the time.

Senator HEFFERNAN: In the case of Clopidogrel, the cost to the taxpayer since the invalidation of the evergreening patent is what?

Mr Noonan : The amount that is involved relates to the period since the undertaking was given. That was in late—

Senator HEFFERNAN: I am referring back to when the extension was granted, which has been invalidated, not to when the court arrangement was weighed on the appeal to the court—‘Yes, we’ll pay back anything to the taxpayer while we are at court.’ That was a couple of years. The real loss to the taxpayer was back to when the evergreening patent, which has been declared invalid, was granted. What is that cost?

Mr Noonan : I will need to give you a little bit more background, particularly focussing on what the act provides, which is, in the case of pharmaceutical patents, an initial period of 20 years—

Senator HEFFERNAN: This is for the benefit of everybody else, not for me. I know all about this.

Mr Noonan : A pharmaceutical patent can be extended under the legislation for five years if there is a delay in granting marketing approval of the pharmaceutical. That had happened in this case. But it is really the original decision that is under challenge in the court.

Senator HEFFERNAN: Yes, but what I am saying is: isn’t there a case to be made out for the $480 million under the present law?

Mr Noonan : The law was applied by the examiner with the powers that they had, and the undertaking that was given by the company was given at the time when the patent came under challenge.

Senator HEFFERNAN: Depending on your interpretation of the law—and I am a wool classer and a welder—the $480 million cost to when the court decided that the evergreen did not exist is not recoverable. Is that what you are surmising, without testing it at court?

Mr Noonan : That would be a matter for the Department of Health and Ageing to pursue, as I said. All recoveries would be a matter for the Department of Health and Ageing.

Senator HEFFERNAN: So where are we up to with the immediate costs from the time of going to court—the last three years, the $60 million or whatever it is, on Clopidogrel?

Mr Noonan : I understand the Department of Health and Ageing is pursuing compensation.

Senator HEFFERNAN: Yes, but they have been telling me that for some time. It is a very slow pursuit. I have not seen anything anywhere in the legal system about it. Have you?

Mr Noonan : I cannot add to what they were able to tell you about what they were doing.

CHAIR: Senator Heffernan, we are going to have to leave it there.

Senator HEFFERNAN: Thank you for your indulgence, Chair, and to the officers for the gracious way they have answered the questions. It is a fraud on the public purse, by the way.

CHAIR: Senator Ludlam for five minutes.

Senator LUDLAM: I want to ask you about ACTA. You would be aware that a fair degree of concern has been expressed to the Joint Standing Committee on Treaties in general on Australia’s participation in the ACTA agreement and also particularly with regard to patents. Can you tell us what effect you believe ACTA will have on the process of determining patent validity and scope, if any?

Mr Noonan : We don’t believe ACTA would have any impact on Australian law in relation to patents. Particular patents are explicitly excluded from the border provision measures of ACTA. Parties retain a discretion to exclude patents from civil measures. We do not see any need to amend existing Australian law to comply with the obligations of ACTA.

Senator LUDLAM: I will come to that in a moment. Some of the witnesses to the treaties committee—and I do not know whether you are following that process or not—have pointed out that they believe the exceptions reinforce the impression that ACTA as a whole is intended to apply to patents. Have you reviewed any of the evidence that points in that direction? Does any of it give you concern?

Mr Noonan : I have not seen the detailed discussions before the committee. But some of these issues were raised in submissions. It is the Department of Foreign Affairs and Trade who coordinate legal advice in relation to that. The advice that they have received is that no changes would be required to Australian law to implement ACTA.

Senator LUDLAM: Yes, we have heard that quite a bit. Do you join with that absolute assurance—that in your view there will not be any further legislative change required?

Mr Noonan : I am not responsible for international law advice to the government, but I think there are firm grounds upon which to proceed. It would need to be weighed against the very significant benefits that ACTA offers to Australia by increasing penalties for counterfeiting and restricting counterfeiting. It offers us two types of benefits—first of all, for Australian exporters, by aligning laws in other countries more with Australian laws. That offers a significant benefit of certainty for people who are exporting their intellectual property. Secondly, it helps to address a longstanding problem of the importing of counterfeit and sometimes dangerously defective products. In these two areas, ACTA offers significant benefits for Australia.

Senator LUDLAM: The advocates for ACTA that have appeared before the treaties committee have been unable to provide any quantifiable idea of what those benefits are, so you are speaking with great confidence that signing up to this treaty will benefit Australia. Do you have any evidence at all to back that up that you could provide us with, because it has been pretty thin on the ground in the treaties committee?

Mr Noonan : I am not responsible for modelling and trying to quantify benefits. I can only draw your attention to two clear benefits in a qualitative sense, as I have done.

Senator LUDLAM: That’s it. Okay.

CHAIR: Thank you very much. We will now call officers of the Commonwealth Science and Industrial Research Organisation.