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Changes to the intellectual property regime – Part two 

This post is part two of a three-part series summarising the changes proposed by the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (Bill) and how they may affect the education sector.

If you missed part one, the Bill proposes to change various patent and Intellectual Property (IP) arrangements by amending the Patents Act 1990 (Cth) (Patents Act), Designs Act 2003 (Cth) (Designs Act) and the Trade Marks Act 1995 (Cth) (Trade Marks Act) to:

  • begin the process of phasing out the innovation patent system and incorporate a new objects clause in the Patents Act
  • provide further legislative guidance on the operation of Crown use
  • provide a new legislative test for when an order can be made by the Federal Court for a patentee to grant a licence to another party to exploit an invention.

Part one of this series focused on explaining the changes to patents proposed by the Bill. Part two explains proposed changes to Crown use rights and part three will explain the proposed changes to the compulsory licensing system.

Crown use

Crown use is a mechanism that allows Australian Federal, State and Territory governments to access and use patented technology, registered designs or other intellectual property rights without having obtained the authorisation of the owner. This Bill provides further guidance on when the right of the Crown can be exercised for registered designs and patented technology.

Historically, there are two main justifications for Crown use provisions. First, the Crown (i.e. the Federal, State and Territory governments) should not be impeded from acting in the public interest by patents, which are granted by the Crown. In other words, the intellectual property right only exists because of the Federal, State and Territory governments and those same governments should have a right to exercise that right for public purposes. Second, the Crown, through its departments and authorities, is ordinarily engaged in public service, rather than commercial activities, and therefore it should be in a unique position concerning the use of a patented invention.

Despite these justifications, the Crown use right has rarely been exercised used in Australia, with only very few cases – two of which concern patents – having been contested before the courts, making this a somewhat speculative area of discussion.

In the service of the Crown

The amendments are intended to provide more clarity about how a Commonwealth, State or Territory entity can exercise its right of Crown use. The amendments permit the relevant Commonwealth, State or Territory entity to exercise a right of Crown use only if:

  • the relevant IP is in the field in which the authority operates
  • the relevant IP relates to the entity’s responsibilities
  • the relevant IP is exploited for the services of the relevant Commonwealth, State or Territory.

‘Services of a relevant Commonwealth, State or Territory’ is defined in the Bill to include services which are primarily funded by the relevant Commonwealth, State or Territory entity. Commentators have said that, in its operation, this amendment will provide the Commonwealth, State or Territory with a broader right of exercise of the Crown use right. However, we note that the process to exercise Crown use (below), and the fact that a Commonwealth, State or Territory entity still exercises the right, will still effectively restrain this suggested ‘scope creep’.

The process

Notwithstanding the broadening of the scope of when a Commonwealth, State or Territory entity can potentially, exercise a right of Crown use, the relevant Commonwealth, State or Territory entity will need to:

  • for a reasonable period, try to obtain, from the applicant for or owner of a patent, an authorisation to exploit the invention on reasonable terms (this requirement is waived during an emergency)
  • receive written approval from the Minister of the relevant Commonwealth, State or Territory entity before exercising the Crown use right
  • if the Crown use right is exercised, notify the patent applicant or owner and give reasons for the decision.

This is a much more detailed process than the previous incarnation of this right, which left the process largely undocumented.

In addition, Crown use is not free. The new amendments provide detail of how a court will determine a payment that is just and reasonable, requiring it to consider:

  • the economic value of the exploitation of the invention
  • any other matter, the court considers relevant.

What to expect? 

At first glance, the amendments appear innocuous, as they seem to be clarifying a pre-existing process. However, the principle concern that has been raised is that it is possible that the ambiguity that existed in the previous provisions served to prevent this right from being exercised often. If this is the case, we may see more use of this refined provision by Commonwealth, State or Territory entities, as the changes will clarify aspects of the Crown use process. That being said, the requirements for Ministerial approval, and that the use be for a ‘public purpose’, make material increase unlikely. Nonetheless, this could materially change Australia’s intellectual property landscape if the right comes to be more widely used by public sector entities.

What does this mean for the education sector?

  • by expanding the definition, it becomes clearer that universities providing services to Commonwealth, State or Territory entities, and those Commonwealth, State or Territory entities, may be able to exercise the right of Crown use if they believe a university needs to use or exploit an invention covered by a patent
  • a university or other patentee might see their invention used or exploited without consent through the exercise of the Crown use right. In some cases this right may be exercised by a competitor
  • in such a case, if a licence fee has not been agreed between the parties, the university or other patentee would be entitled to be paid a ‘just and reasonable’ licence fee or royalties.
Authors:
Anthony Willis | Partner
61 2 6120 4835
Anthony.Willis@maddocks.com.au
Benjamin Duff | Lawyer
61 2 6120 4857
Benjamin.Duff@maddocks.com.au

 

This post is part two of a three-part series summarising the changes proposed by the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (Bill) and how they may affect the education sector.

If you missed part one, the Bill proposes to change various patent and Intellectual Property (IP) arrangements by amending the Patents Act 1990 (Cth) (Patents Act), Designs Act 2003 (Cth) (Designs Act) and the Trade Marks Act 1995 (Cth) (Trade Marks Act) to:

  • begin the process of phasing out the innovation patent system and incorporate a new objects clause in the Patents Act
  • provide further legislative guidance on the operation of Crown use
  • provide a new legislative test for when an order can be made by the Federal Court for a patentee to grant a licence to another party to exploit an invention.

Part one of this series focused on explaining the changes to patents proposed by the Bill. Part two explains proposed changes to Crown use rights and part three will explain the proposed changes to the compulsory licensing system.

Crown use

Crown use is a mechanism that allows Australian Federal, State and Territory governments to access and use patented technology, registered designs or other intellectual property rights without having obtained the authorisation of the owner. This Bill provides further guidance on when the right of the Crown can be exercised for registered designs and patented technology.

Historically, there are two main justifications for Crown use provisions. First, the Crown (i.e. the Federal, State and Territory governments) should not be impeded from acting in the public interest by patents, which are granted by the Crown. In other words, the intellectual property right only exists because of the Federal, State and Territory governments and those same governments should have a right to exercise that right for public purposes. Second, the Crown, through its departments and authorities, is ordinarily engaged in public service, rather than commercial activities, and therefore it should be in a unique position concerning the use of a patented invention.

Despite these justifications, the Crown use right has rarely been exercised used in Australia, with only very few cases – two of which concern patents – having been contested before the courts, making this a somewhat speculative area of discussion.

In the service of the Crown

The amendments are intended to provide more clarity about how a Commonwealth, State or Territory entity can exercise its right of Crown use. The amendments permit the relevant Commonwealth, State or Territory entity to exercise a right of Crown use only if:

  • the relevant IP is in the field in which the authority operates
  • the relevant IP relates to the entity’s responsibilities
  • the relevant IP is exploited for the services of the relevant Commonwealth, State or Territory.

‘Services of a relevant Commonwealth, State or Territory’ is defined in the Bill to include services which are primarily funded by the relevant Commonwealth, State or Territory entity. Commentators have said that, in its operation, this amendment will provide the Commonwealth, State or Territory with a broader right of exercise of the Crown use right. However, we note that the process to exercise Crown use (below), and the fact that a Commonwealth, State or Territory entity still exercises the right, will still effectively restrain this suggested ‘scope creep’.

The process

Notwithstanding the broadening of the scope of when a Commonwealth, State or Territory entity can potentially, exercise a right of Crown use, the relevant Commonwealth, State or Territory entity will need to:

  • for a reasonable period, try to obtain, from the applicant for or owner of a patent, an authorisation to exploit the invention on reasonable terms (this requirement is waived during an emergency)
  • receive written approval from the Minister of the relevant Commonwealth, State or Territory entity before exercising the Crown use right
  • if the Crown use right is exercised, notify the patent applicant or owner and give reasons for the decision.

This is a much more detailed process than the previous incarnation of this right, which left the process largely undocumented.

In addition, Crown use is not free. The new amendments provide detail of how a court will determine a payment that is just and reasonable, requiring it to consider:

  • the economic value of the exploitation of the invention
  • any other matter, the court considers relevant.

What to expect? 

At first glance, the amendments appear innocuous, as they seem to be clarifying a pre-existing process. However, the principle concern that has been raised is that it is possible that the ambiguity that existed in the previous provisions served to prevent this right from being exercised often. If this is the case, we may see more use of this refined provision by Commonwealth, State or Territory entities, as the changes will clarify aspects of the Crown use process. That being said, the requirements for Ministerial approval, and that the use be for a ‘public purpose’, make material increase unlikely. Nonetheless, this could materially change Australia’s intellectual property landscape if the right comes to be more widely used by public sector entities.

What does this mean for the education sector?

  • by expanding the definition, it becomes clearer that universities providing services to Commonwealth, State or Territory entities, and those Commonwealth, State or Territory entities, may be able to exercise the right of Crown use if they believe a university needs to use or exploit an invention covered by a patent
  • a university or other patentee might see their invention used or exploited without consent through the exercise of the Crown use right. In some cases this right may be exercised by a competitor
  • in such a case, if a licence fee has not been agreed between the parties, the university or other patentee would be entitled to be paid a ‘just and reasonable’ licence fee or royalties.
Authors:
Anthony Willis | Partner
61 2 6120 4835
Anthony.Willis@maddocks.com.au
Benjamin Duff | Lawyer
61 2 6120 4857
Benjamin.Duff@maddocks.com.au