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Thursday, 12 August 2004
Page: 26292


Senator CONROY (11:01 AM) —by leave—I move opposition amendments (1) to (4):

(1) Schedule 7, item 6, page 82 (lines 19 to 22), omit paragraph 26B(1)(a), substitute:

(a) a certificate to the effect that the applicant, acting in good faith, believes on reasonable grounds that it is not marketing, and does not propose to market, the therapeutic goods in a manner, or in circumstances, that would infringe a valid claim of a patent that has been granted in relation to the therapeutic goods; or

(2) Schedule 7, item 6, page 83 (after line 8), after section 26B, insert:

26C Certificates required in relation to patent infringement proceedings

(1) This section applies if:

(a) a person gives a certificate required under subsection 26B(1) in relation to therapeutic goods; and

(b) another person (the second person) intends to commence proceedings under the Patents Act 1990 against the person referred to in paragraph (1)(a) for infringement of a patent that has been granted in relation to the therapeutic goods (the proceedings).

(2) The second person, before the date upon which the proceedings are commenced, must give to the Secretary and to the person referred to in paragraph (1)(a) the certificate required by subsection (3).

(3) The certificate required by this subsection is a certificate to the effect that the proceedings:

(a) are to be commenced in good faith; and

(b) have reasonable prospects of success; and

(c) will be conducted without unreasonable delay.

The certificate must be signed by, or on behalf of, the second person and must be in a form approved by the Secretary.

(4) For the purpose of paragraph (3)(b), proceedings have reasonable prospects of success if:

(a) the second person had reasonable grounds in all the circumstances known to the second person, or which ought reasonably to have been known to the second person (in addition to the fact of grant of the patent) for believing that he or she would be entitled to be granted final relief by the court against the person referred to in paragraph (1)(a) for infringement by that person of the patent; and

(b) the second person had reasonable grounds in all the circumstances known to the second person, or which ought reasonably to have been known to the second person (in addition to the fact of grant of the patent) for believing that each of the claims, in respect of which infringement is alleged, is valid; and

(c) the proceedings are not otherwise vexatious or unreasonably pursued.

(5) The person referred to in paragraph (1)(a), with leave of the court, or the Attorney-General, may apply to a prescribed court for an order that the second person pay to the Commonwealth a pecuniary penalty if the second person gives a certificate required under subsection (3) and:

(a) the certificate is false or misleading in a material particular; or

(b) the second person breaches an undertaking given in the certificate.

Maximum penalty: $10,000,000.

(6) When determining the extent of a pecuniary penalty to be ordered pursuant to subsection (5), the court must take into account:

(a) any profit obtained by the second person; and

(b) any loss or damage suffered by any person;

by reason of the second person exploiting the patent during the proceedings.

(7) For the avoidance of doubt, subsection (6) does not limit the matters the court may take into account when determining a pecuniary penalty ordered pursuant to subsection (5).

(8) If:

(a) the second person has sought and obtained in the proceedings an interlocutory injunction restraining the person referred to in paragraph (1)(a) from infringing a patent; and

(b) section 26D does not apply; and

(c) a prescribed court declares that the second person has given a certificate required under subsection (3); and

(d) a prescribed court declares that:

(i) the certificate is false or misleading in a material particular; or

(ii) the second person has breached an undertaking given in the certificate;

the prescribed court may, pursuant to this section, order that the second person pay to the Commonwealth, a State or a Territory compensation for any damages sustained or costs incurred by the Commonwealth, a State or a Territory as a result of the grant of the interlocutory injunction.

(9) In this section:

prescribed court has the same meaning as in the Patents Act 1990.

(3) Schedule 7, item 6, page 83 (after line 8), after section 26B, insert:

26D Requirements for interlocutory injunction

(1) This section applies where:

(a) an applicant gives notice to a patentee in accordance with subparagraph 26B(1)(b)(iii); and

(b) the patentee and/or its exclusive licensee (in this section the party or parties is or are referred to as the patentee) applies to a prescribed court for an interlocutory injunction to restrain the applicant from marketing the therapeutic goods the subject of the application on the ground that such conduct will constitute an infringement of its patent.

(2) An application for interlocutory relief in accordance with subsection (1) may not be instituted unless the patentee has first notified the Attorney-General of the Commonwealth, or of a State or of a Territory in writing of the application.

(3) The Attorney-General of the Commonwealth shall be deemed to be a party to any proceedings commenced in accordance with subsection (1) unless the Attorney-General gives written notice to the prescribed court that he or she does not desire to be a party.

(4) If an interlocutory injunction is granted pursuant to an application made as described in subsection (1) and:

(a) the patentee subsequently discontinues the principal proceedings without the consent of the other parties thereto; or

(b) the principal proceedings are dismissed; and

(c) in either case, the prescribed court declares that:

(i) the patentee did not have reasonable grounds, in all the circumstances known to the patentee or which ought reasonably have been known to the patentee:

(A) to believe that it would be granted final relief by the prescribed court against the person referred to in paragraph (1)(a) for infringement by that person of the patent; or

(B) (in addition to the fact of grant of the patent), for believing that each of the claims, in respect of which infringement is alleged in the proceedings, would have a reasonable prospect of being held to be valid if challenged by the applicant referred to in paragraph (1)(a); or

(ii) the application for the interlocutory injunction was otherwise vexatious or not reasonably made or pursued;

the prescribed court may, in addition to any other relief which it believes should be granted to any person, make any of the orders described in subsection (5).

(5) If the prescribed court makes a declaration pursuant to paragraph (4)(c), the prescribed court may, pursuant to the usual undertaking as to damages given by the patentee to the prescribed court to obtain the interlocutory injunction:

(a) assess and award compensation to the applicant referred to in subsection (1) against whom the interlocutory injunction was made:

(i) on the basis of an account of the gross profits of the patentee arising from the sale by it in Australia of the therapeutic goods the subject of the interlocutory injunction, during the period of the interlocutory injunction, without requiring the said applicant to establish or quantify its actual loss; or

(ii) on such other basis as the court determines to be appropriate; and

(b) award to the Commonwealth compensation for any damages sustained, or costs incurred, by it as a result of the grant of the interlocutory injunction;

(c) award to a State or a Territory compensation for any damages sustained, or costs incurred, by it as a result of the grant of the interlocutory injunction.

(6) In this section:

prescribed court has the same meaning as in the Patents Act 1990.

(4) Schedule 7, item 7, page 83 (after line 12), at the end of the item, add:

(2) The amendments made by item 6 apply to legal proceedings commenced on or after the day on which this Schedule commences.

When the government announced on 8 February this year that it had concluded negotiations with the United States on the text of a free trade agreement, it made many claims about the potential benefits of the deal for Australia. The minister put out a press release claiming the virtues of the deal. The Australian public were expected to take on trust that this was a great outcome for our country. The minister initially put out a two-page release but the United States released a great deal more information, claiming their victories in negotiations. It was immediately obvious that the two stories did not stack up. Who was telling the truth? What was the Australian public expected to believe?

Release of the text was another month away, and yet the government expected the public, the Australian Labor Party and the Australian parliament to fall in line and support the deal. It was not good enough. The US government was claiming victory on the PBS and audiovisual services, while the Australian government was claiming that these areas were fully protected. The Australian public, this parliament and the Labor Party were expected to support a deal that ultimately ran to more than 1,000 pages, sight unseen. The cabinet ticked off on it, sight unseen. Labor was not prepared to do that.

The FTA has broad-ranging implications for so many areas of Australian public policy. Australia's economic, trade, foreign, health, media, industry, agriculture and quarantine policies are all affected by aspects of the FTA. It extends even further to our intellectual property laws and copyright, customs and telecommunications, investment, financial services, government procurement, and electronic commerce. These are substantial issues requiring careful consideration. They should not have been forced onto the parliament or the Australian public without the opportunity for them to be considered and assessed on their merits. It was up to Labor to establish a mechanism to give the public an opportunity to have its say on the FTA. In the interests of transparency and proper parliamentary processes, Labor established the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America. The committee received over 500 submissions and held public hearings on 13 occasions in Sydney, Melbourne and Canberra.

It was through the committee process that the parliament was able to bore down into all of the detail contained in the FTA. Those in business who strongly supported the deal gave evidence on the benefits they believed would arise. Those who had concerns about aspects of the deal gave evidence supporting their arguments. The government's negotiating team sat through many hours of the committee's hearings, providing us all with a greater understanding of how the deal was developed and how it would impact on current public policy. May I take this time to thank the negotiating team for their great cooperation and assistance throughout the FTA inquiry and their willingness to explain in great detail the implications of the deal. Expertly led by Mr Stephen Deady, the Australian officials have worked under enormous pressure over the past 12 months to conclude a deal to fit in with the Prime Minister's timetable, a timetable that was rushed purely for political reasons but a timetable that Australia's officials met through great professionalism and dedication to the task at hand.

Of the many issues raised during the Senate inquiry there were two notable ones of great interest to many Australians. These were in relation to the capacity of future Australian governments to regulate for local content on current and future media mechanisms. In this regard the US claimed:

In the area of broadcasting and audiovisual services, the FTA contains important and unprecedented provisions to improve market access for U.S. films and television programs over a variety of media including cable, satellite, and the Internet.

But Minister Vaile claimed:

Our right to ensure local content in Australian broadcasting and audiovisual services, including in new media formats, is retained.

To address these concerns, Labor said it would only support the FTA if our local content laws were legislated to ensure that any change to these laws could only be agreed to by the parliament. Once again, Labor set the agenda—it set the policy to protect the great Australian way of life—and the government followed. Labor set the policy to protect Australian local content and the government responded by drafting the amendment and filling out the paperwork to enable the Senate to pass the amendment last night. Labor set the policy to protect local culture and to ensure Australian voices continue to be heard and Australian faces continue to be seen on Australian TV. These were Labor demands, and the government followed.

Another key issue raised in the inquiry was the potential impact of the deal on our Pharmaceutical Benefits Scheme—a great Australian health scheme established in 1948 by the Chifley government. Chifley amended our Constitution to ensure this program could provide affordable medicines for the health and wellbeing of the Australian community. Labor has always said that it would not support the FTA if it in any way undermined the PBS—that if the FTA in any way undermined community access to cheap, affordable drugs it would be a deal breaker. What did the US say with regard to the outcome on the PBS? The US claimed:

... Australia will make a number of improvements in its Pharmaceutical Benefits Scheme (PBS) procedures—including establishment of an independent process to review determinations of product listings—that will enhance transparency and accountability in the operation of the PBS.

But Mr Vaile claimed:

The Pharmaceutical Benefits Scheme (PBS), in particular the price and listing arrangements that ensure Australians' access to quality, affordable medicines, remains intact.

Once again, that was not good enough for the Labor Party. The Australian community was not confident in the government's assurances, medical and academic experts on the PBS were not satisfied with the government's assurances and Labor was not in any way convinced by the government's assurances. We have to be absolutely certain the FTA will not in any way undermine or delay community access to cheap medicines. Labor will not allow cheap drugs to be delayed by dodgy patent claims. Companies trying to pull that stunt face severe financial penalties if a court determines that their claims were initiated without a reasonable basis for believing that their claims would be successful. Labor has moved these amendments on that basis to protect the PBS.

Amendment (1), on claims in good faith, amends the legislation to reduce the burden of proof on the generic company in certifying what is covered by a registered patent. The current legislation is too strict. The bill needs to be qualified to reduce the risk to the generic company making the certification. As amended, the generic company will now be giving a certificate on the basis of good faith and on reasonable grounds. The insertion of the words `valid claim of' is necessary because not all claims in the patent might validly apply to the proposed drug of the generic company.

Amendment (2) requires that if the patent-holding company wants to commence litigation against a generic drug company then it too must fill out a certificate at that same basic standard. This certificate requires the patent-holding company to contest the case in good faith, have a reasonable chance of success and proceed without unreasonable delay. If the certificate filled out by the patent-holding company is false or misleading or an undertaking given under the certificate is broken, the patent-holding company can be penalised by up to $10 million and the court can order compensation to be paid to the Commonwealth, states and territories for losses sustained as a result of the injunction, including any additional costs incurred by the PBS and public hospitals.

The current law requires that a court cannot grant an interlocutory injunction unless the applicant provides an undertaking as to damages. Amendment (3) enhances the entitlement to damages for the generic company and for the Commonwealth, states and territories. If the patent-holding company wants to take injunction proceedings after being notified by the generic company that it is bringing a generic drug onto the market, it will be liable for damages: if the case is discontinued by the patent-holding company, if the case is dismissed and the court determines the patent-holding company did not have reasonable grounds to believe it would succeed in the overall action or to believe that each of its claims was valid, or if the basis of the injunction was vexatious, not reasonably made or unreasonably pursued. The court can award damages to the generic company, including on the basis of the patent-holding company's gross profits on its drug during the period of the injunction.

Let us be clear: if a court finds that a drug company has got a bodgie patent and has been deliberately keeping generic drugs off the market, the court can order that all profits made by that company on that drug be taken from them. This is a seriously punitive penalty. That is what is necessary to make sure that this practice, prevalent in the US, does not come to Australia. It is not something that the Labor Party wants and it is not something the Australian community wants. This amendment puts in place a serious disincentive for companies to engage in this bodgie practice.

Our final amendment, amendment (4), makes it clear that the legislation will not apply retrospectively. It is encouraging that the Prime Minister indicated earlier this morning that his government supports the amendments. The Prime Minister claims these amendments are unnecessary. He claims that the penalties that could be imposed will deter innovation and impact unfairly on Australian companies. Labor has strong, sound, expert legal advice that these amendments are rock solid. Once again the Prime Minister has created a straw man to obfuscate his failure to protect the PBS. He caved in; we will not.

These amendments are consistent with all of Australia's commitments with regard to the WTO and the free trade agreement. The only person who has changed his position on this issue is the Prime Minister. It was a fascinating press conference this morning. It reminded me of that iconic Australian film The Castle. The fly-by-night solicitor, Dennis Denuto—if you remember that—is stuck in the court in a legal quagmire and he says to the presiding judge: `It's the Constitution; it's Mabo; it's the vibe.' That is what we saw this morning from the Prime Minister. It was not anything to do with the words, the legal advice. He was worried because of the vibe. That is the argument that he put up.

Today John Howard has had a Dennis Denuto moment. Unable to say what was wrong with Labor's amendments, the Prime Minister bumbled and blustered and grasped at straws. He said that the US may object to the text of the enabling legislation. He also said that Labor's amendments were unnecessary. If they are unnecessary, how can they be objectionable? If they are objectionable then Labor is here to tell you that they are necessary. If these statements are true, you have to wonder why the Prime Minister has agreed to these amendments. The truth is that Labor's amendments will protect the PBS. Australians should see the Prime Minister's statements this morning for what they are: creating a straw man and knocking it over, just to cover for the fact that he did not do his job. He did not get a tough enough agreement that protected the PBS. Labor has delivered. Labor has stuck to its position from day one: if the FTA undermined the PBS it was a deal breaker. Today we made sure that we protected the PBS.