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Intellectual Property Laws Amendment Bill 2006

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2004-2005-2006

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

Intellectual Property Laws Amendment Bill 2006

 

 

 

 

FURTHER EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of

the Parliamentary Secretary to the Minister for Industry, Tourism and Resources,

the Hon Bob Baldwin MP)

 

 

 

 



Intellectual Property Laws Amendment Bill 2006

Outline

 

This explanatory memorandum (EM) is a further EM to the one presented to the House of Representatives on 30 March 2006.

 

It has been prepared in response to the report of the Senate Economics Legislation Committee (the Committee) into the provisions of the Intellectual Property Laws Amendment Bill 2006 (the Bill), which was tabled in the Senate on 17 August 2006. The Committee recommended that:

 

“the Government reconsider Schedule 8 of the Bill in the light of the concerns raised by Professor Corones and Mr Clapperton, in order to clarify the relationship between the patent licensing provisions of the Bill and the Trade Practices Act.”

 

After reconsidering Schedule 8 to the Bill in the light of these concerns (which are reproduced in the Committee’s report), and after consultation with Professor Corones, this further EM has been prepared in order to clarify the relationship between these provisions.

 

The following pages are intended to replace pages 44 and 45 of the original EM. Paragraphs 173 and 174 more clearly set out the relationship between these provisions.



1.              an apparatus or method specifically designed for manufacturing or testing a particular pharmaceutical substance.

160.     The reference in subparagraph 119A(3)(b)(i) and (ii) to ‘raw materials’ is intended to cover all materials and substances required for production of the good. The reference in subparagraph 119A(3)(b)(iii) to ‘pro-drug’ is intended to cover pro-drugs that metabolise into pro-drugs, as well as pro-drugs that metabolise into pharmaceutical substances. The reference to ‘metabolite’ is intended to cover anything into which a metabolite is subsequently metabolised.

Item 4

161.     Item 4 is an application provision.

162.     According to this item, the amendments made by this Schedule will apply to any patents that are in force at or after the time that the Schedule commences. This is intended to cover all patents applied for and granted before commencement, as well as to patents applied for and granted after commencement.

163.     It is also intended to cover patents that have ceased prior to commencement and which are restored after commencement.

164.     The Schedule applies only to the exploitation of any patents as described in the previous paragraphs that occurs at or after the time that the Schedule commences. Subsection 78(2) as enacted immediately prior to commencement of this Schedule will continue to apply to any exploitation of patents that occurred prior to commencement. 

Schedule 8—Compulsory licensing of patents

Patents Act 1990

 

165.     Schedule 8 implements the Government’s response to a recommendation from the IPCR Committee’s Review of Intellectual Property Legislation under the Competition Principles Agreement .

166.     The IPCR Committee recommended that section 135 of the Patents Act be repealed and that subsection 133(2) be amended to include an order requiring a compulsory license to be made if and only if all of the following conditions are met:

(a)            access to the patented invention is required for competition in the (relevant) market;

(b)           there is a public interest in enhanced competition in that market;

(c)            reasonable requirements for such access have not been met;

(d)           the order will have the effect of allowing these reasonable requirements to be better met; and

(e)            the order will not compromise the legitimate interests of the patent owner, including that owner's right to share in the return society obtains from the owner's invention, and to benefit from any successive invention, made within the patent term, that relies on the patent.

160.     The IPCR Committee considered that the test for a compulsory licence should be stringent, and that a licence should only be granted if there is no other option for competition in the relevant market than by having access to the patented invention. It also considered that the enhancement of competition in the relevant market that would be secured by grant of the compulsory licence would have to be material and substantial.

161.     The Government accepted this recommendation in part, agreeing to make the compulsory licensing of patents subject to a competition test. However, the Government did not accept that a competition test should be the only test for compulsory licences. Instead, the Government agreed



to retain the existing test for compulsory licences, but to add a competition test as an additional ground on which a compulsory licence can be obtained. The Government also considered that all applications for compulsory licences should be considered by the Federal Court in the first instance.

162.     The IPCR Committee did not seek to draft the conditions that would need to be met for the grant of a compulsory licence.  Rather than introducing a new competition-based test into the Patents Act, the Government considers that a compulsory licence should be obtainable as a remedy if the patentee is acting anti-competitively in contravention of Part IV of the Trade Practices Act 1974 .

Item 1

163.     Item 1 omits the reference in subsection 133(1) to ‘a prescribed court’ (defined in Schedule 1 to the Patents Act as including the Federal Court and State and Territory Supreme Courts), and replaces it with a reference to the Federal Court.

Item 2

164.     This item repeals paragraphs 133(2)(a) and (b), and substitutes new paragraphs 133(2)(a) and (b). The original paragraphs 133(2)(a) and (b) set out the two limbs of the existing test for grant of compulsory licences for patents; the ‘reasonable requirements of the public’ test and if the patentee has given no satisfactory reason for failing to exploit the invention. The ‘reasonable requirements of the public’ are set out in section 135 of the Patents Act. New subparagraph 133(2)(a)(i) reflects the former subsection 133(3A), which is repealed by item 3.

165.     Paragraph 133(2)(b) represents the additional competition test for compulsory licences. Under this test, if the patentee has contravened or is contravening Part IV of the Trade Practices Act or an application law (as defined in section 150A of the Trade Practices Act) in connection with a patent, then a compulsory licence is available as a remedy for that contravention. The Trade Practices Act is part of a national scheme of legislation restricting anti-competitive conduct. An ‘application law’ (as defined in section 150A of the Trade Practices Act) refers to the various State and Territory Competition Policy Reform Acts that are the State and Territory enactments comprising this national scheme.

166.     In NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 120-121 [85] the High Court of Australia indicated that, if an intellectual property owner refuses to licence intellectual property, or only licenses it on particular conditions, section 46 of the Trade Practices Act can be attracted, and used to create access regimes. However, the Trade Practices Act does not include a specific provision under which a person can directly apply to the court for a compulsory licence of a patent.

 

167.     This provision to be inserted into the Patents Act is intended to complement the remedies available under the Trade Practices Act, and is not intended to limit the court's powers under the Trade Practices Act. It is intended to clarify that a compulsory licence for a patent is available as a remedy under the Patents Act for any breach of Part IV of the Trade Practices Act. This is in addition to any other remedies that may be available under the Trade Practices Act.

Item 3

168.     Item 3 repeals subsection 133(3A). The text that was formerly in this subsection has been inserted into subparagraph 133(2)(a)(i) (see item 2).

Item 4

169.     Item 4 omits the reference in paragraph 133(5)(b) to ‘a prescribed court’, and replaces it with a reference to the Federal Court.