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Wednesday, 5 May 1915

Mr HUGHES (West Sydney) (AttorneyGeneral) . - The Patents Act gives statutory form to a practice that has been in vogue for centuries, modified, of course, by the developments in the arts and sciences, and particularly in the concept of society in its relation to patentees. A patentee, during the period for which his patent is granted, may sue any person who infringes his patent rights. He has, in short, a monopoly which he may maintain by civil action. By the amending Act of last year the patent rights of enemy subjects were made liable to suspension or avoidance, at the discretion of the Minister, who was empowered to appoint licensees to exercise them. A similar position was created in regard to trade marks and designs. But it is found that, when patent rights have been suspended or avoided, every person in the community may make or vend the patented article, which makes a Crown licence of little or no value. No person would be willing to invest a capital of, say, £50,000 in the production of a patented article unless he were assured of a market in which he would be protected, and in which his outlay could be recouped. If a licensee is to be in no better position than any other person in respect to the production of patented articles, there will be no inducement to obtain licences.

Mr Glynn - Are the royalties being retained until the war is over ? That was the understanding in England.

Mr HUGHES - We have no power to demand royalties from any person other than a licensee, and the royalties paid will remain in a trust fund, to be administered at the close of the war as circumstances may determine and Parliament may dictate. There is another phase of the matter. Suppose A to be the patentee of an article, the production of which demands a capital of £50,000 or thereabouts. If A's patent rights are suspended, and a licence to manufacture the patented article is granted to B, on condition that he pays a royalty to the Crown, B will manufacture only if he is protected against competition, or if the competition is limited to Crown licensees. Now, any person may infringe the patent rights. Where a patent has been avoided and a licence to manufacture has been granted to a Government official as representative and agent for the Crown, other persons may manufacture the patented article, and cannot be proceeded against, either civilly or criminally. The Crown cannot sue for infringement, because the right to do that was vested solely in the patentee, and does not pass to the Crown, on the avoidance or suspension of a patent.

Mr Glynn - I called attention to that weakness in this legislation during the second-reading debate of the Bill of last year.

Mr HUGHES - That is so. The honorable member then said that the right of action for infringement was gone. But it has not gone permanently; it has gone only during the war, or during the period of suspension or avoidance of the patent. After the war, patentees will be able to call to account any person who, without their permission and without licence from the Crown, has infringed a patent. Action against a licensee would, of course, be barred by Statute. The Bill has been introduced to give the Crown power topunish unlicensed persons for infringing patent rights which have been suspended in favour of any person or persons. It thus safeguards to some extent the rights of patentees as well as thoseof licensees. Whatever be determined as to the distribution of the royalties collected under the amending Act of 1914, the patentee whose patent has been suspended or avoided is placed by this Bill in a better position to recover after the war whatever he may be entitled to. The measure also assures a monopoly in the production of the patented article tothe Crown licensee. and is thus a necessary complement to the Act of last year. The intention to give the licensee a monopoly, and to transfer to him all the rights of the patentee, was imperilled by a defect in .the Act of 1914. That Act took his monopoly from the patentee whose patent was avoided or suspended, but left the community free to make, vend, or use the patented article, nob only when the patent was- avoided, but whenit was suspended 'in favour of a Crown licensee. In this explanation of the Bill I have confined my remarks to patent rights, and have not referred totrade marks and designs, because, so far as this Bill goes, the difference between them is not one of principle. If it can be shown that the measure can be made more effective, I shall be glad to adopt amendments to that end. The Act of last year was introduced to enable the community to continue to enjoy the benefits of patented articles affected by the wax, to offer sufficient inducements to licensees in whose favour the patent was suspended to put their money into the manufacture of these articles, so that Australia should gain not only by opportunities for use of the article, but also by the establishment of industries for its manufacture, and where this could only be effected by suspension and not by avoidance. The 1914 Act has been found defective in so far that a licence now granted to a person under it does not give that person such a monopoly as would induce him to invest his capital, nor does it protect the community, because, since it enables any nian to use the patent involved, it, in effect, in many cases, will prevent any from doing so.

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